■ v. 


LIBRARY 


OF  THE 


UNIVERSITY  of  ILLINOIS, 


S.  R.  Knott,  Esq. 


Arbitrators. 


T.  G.  Bosh,  Esq.  ) 

Gentlemen  : This  case  is  a controversy  between 
the  Southern  Railway  on  the  one  hand  and  the  Louis- 
ville & Nashville,  the  Mobile  & Ohio,  the  Kansas  City, 
Memphis  & Birmingham,  the  Alabama  & Vicksburg,  the 
New  Orleans  & Northeastern,  the  Yazoo  & Mississippi 
Valley,  and  the  Illinois  Central  railroads,  on  the  other, 
growing  out  of  the  action  of  the  Southern  Railway  in 
arbitrarily  reducing  the  rates  on  cotton,  in  some  cases  as 
much  as  $1.10  per  bale,  from  Alabama,  Tennessee,  and 
Mississippi  stations  to  the  mills  in  North  and  South 
Carolina,  against  the  desires, -the  entreaties,  and  strong 
protests  of  the  other  lines  in  interest,  causing  a large 
and  wanton  destruction  of  the  earnings  of  these  other 
lines  without  any  material  gain  to  the  Southern  Railway. 

This  matter  had  its  inception  at  a meeting  of  the 
Southern  cotton-carrying  lines  held  at  Atlanta,  Ga., 
June  5 and  6,  1900.  At  that  meeting  a representative  of 
the  Southern  Railway  offered  a resolution  providing: 
“That  in  establishing  through  rates  on  cotton  from 
points  outside  of  the  territory  of  the  associated  railways 
of  Virginia  and  the  Carolinas,  said  territory  of  destina- 
tion be  divided  into  two  parts.”  The  boundaries  of  these 
parts  were  defined,  the  farther,  or  northern  part,  being 
designated  as  Group  1,  as  follows : 

Group  1.  Points  on  and  north  of  a line  drawm  from 
Marion,  N.  C.,  through  Rutherfordton,  Lincolnton,  Char- 
lotte, thence  along  the  Seaboard  Air  Line  to  Maxton, 


i 


2 


inclusive,  and  including  stations  on  main  line  of  the 
South  Carolina  & Georgia  Extension  Railroad,  west  of 
Blacksburg,  and  stations  on  C.  & N.-W.  Ry.  north  of 
Gastonia,  except  Durham  & Charlotte  Railroad  stations, 
Aberdeen  & Asheboro  Railroad  stations,  and  Charlotte, 
N.  C. 

Group  2.  Points  in  the  territory  of  the  associated 
railways  south  and  west  of  the  above  line  not  provided 
for  in  Group  1,  including  Charlotte,  N.  C. 

Then  followed  a list  of  the  rates  which  were  to  apply 
to  Group  1 territory  on  cotton  from  Atlanta  and  stations 
west  thereof  to  the  Mississippi  River.  To  points  of  des- 
tination in  territory  described  as  Group  2,  the  rates  were 
to  be  5 cents  per  100  pounds  less  than  to  Group  1. 

Rates  to  stations  on  the  Durham  & Charlotte  and 
Aberdeen  & Asheboro  stations  excepted  in  Group  1 terri- 
tory were  to  be  made  on  so-called  “combination,”  that 
is,  by  adding  the  rate  to  a basing  point  in  Group  1 terri- 
tory to  the  rate  from  such  basing  point  to  destination. 

Previous  to  this  proposal  of  the  Southern  Railway 
the  rates  established  to  the  territory  embraced  in  Groups 
1 and  2 were  the  same.  Under  this  new  division,  how- 
ever, while  the  reductions  to  Group  1 territory  have  been 
of  a radical  character,  the  rates  to  Group  2 territory  are 
more  so,  being  25  cents  per  bale  greater. 

This  proposition  of  the  Southern  Railway  which,  since 
September  1st,  has  been  forced  in  effect  by  that  line, 
reduced  the  rates  from  its  junctions  with  the  Illinois 
Central  and  Yazoo  & Mississippi  Valley  lines  as  much  as 
90  cents  and  $1.10  per  bale  at  points  of  importance,  and 
$1.45  and  $1.65  per  bale  at  places  of  less  importance. 

The  proposition  was  supported  only  by  the  Southern 
Railway  and  the  interested  Carolina  lines.  Upon  its 
rejection,  the  Southern  Railway  gave  notice,  reserving 
its  right  to  establish  the  reduced  rates  upon  giving  notice 
to  other  lines  interested.  (Southeastern  Freight  Associa- 
tion Circular  Letter  No.  4,  Series  1900-1901.) 


3 


The  next  phase  of  this  subject  was  a telegram  from 
Mr.  Finley,  the  vice-president  of  the  Southern  Railway, 
dated  New  York,  June  7th,  addressed  to  the  executive 
officers  of  southern  lines,  as  follows  : 

u The  cotton  mill  industry  in  the  Piedmont  and  other 
sections  of  the  South  has  been  so  developed  that  the 
volume  of  cotton  controllable  within  the  States  in  which 
the  mills  are  located  is  not  sufficient  to  fully  meet  the 
requirements  of  the  mills,  and  it  has  become  necessary 
for  the  mills  to  draw  a portion  of  the  cotton  necessary  to 
meet  their  requirements  from  other  sections  of  the  South. 
Heretofore  the  rates  on  cotton  from  points  in  the  South 
have  been  made  in  the  main  in  relation  to  mills  in  New 
England  and  the  requirements  of  the  export  trade.  The 
conditions  now  surrounding  the  cotton  mill  industry  of 
the  South  naturally  create  another  market,  in  relation  to 
which  rates  on  cotton  should  as  well  be  equitably  ad- 
justed. This  large  investment  in  cotton  mills  in  the 
South  has  been  made  with  confidence  in  a rate  policy  on 
the  part  of  the  railways  of  the  South  which  will  fully 
protect  the  mills  in  their  natural  and  relative  position. 
I regret,  therefore,  that  an  adjustment  of  rates  proposed 
by  our  company  at  a mass  meeting  at  Atlanta,  on  the  6th 
inst.,  concurred  in  by  the  Atlantic  Coast  Line,  Seaboard 
Air  Line,  and  others,  and  which  has  only  in  contemplation 
the  protection  of  the  cotton  mill  industry  of  the  South  in 
• its  relative  position,  should  have  met  with  some  opposi- 
tion. It  would  unfavorably  affect  the  general  industrial 
development  of  the  South  to  force  the  cotton  mills  into  a 
position  where  they  may  be  obliged  to  resort  to  commis- 
sions and  courts  for  the  relief  which  should  be  equitably 
and  voluntarily  accorded  by  the  railways.  I am  quite 
sure,  from  information  in  my  possession,  this  will  be  the 
course  of  the  mills  unless  the  matter  is  fairly  adjusted  by 
the  railways.  Our  company  is  opposed  to  permitting  the 
matter  assuming  this  shape.  I bring  the  matter  to  your 
attention,  feeling  sure  that  our  proposed  adjustment  will 
meet  with  your  concurrence.  Joint  to  executive  officers 
of  lines  in  South.” 

Another  meeting  was  held  at  Atlanta  June  27tli,  to 
consider  these  Carolina  cotton  rates.  At  that  meeting 
Mr.  Finley’s  remarks  are  reported  as  follows  : 


4 


“To  get  this  subject  before  the  meeting,  I will  sub- 
mit a statement  in  behalf  of  oar  company,  for  the  reason 
that  it  is  largely  responsible  for  the  docketing  of  the 
subject  for  this  special  meeting.  We  have  been  engaged 
for  the  last  several  years,  or  for  a longer  period,  in  an 
effort  to  have  these  mills  located  in  the  South.  That 
work  has  been  not  only  among  those  who  have  capital  to 
invest  in  such  industries  in  the  South,  but  among  those 
who  already  have  investments  of  the  same  character  in 
the  North.  The  efforts  of  our  company,  and  the  efforts 
of  others  in  that  direction,  and  the  force  of  natural  con- 
ditions or  circumstances,  have  led  to  the  location  of  a 
great  many  mills,  and  the  industry  has  grown  far  beyond 
my  own  expectations  — I mean  within  this  limited  time. 
I firmly  believed  this  industry  would  reach  its  present 
condition  in  time,  but  I think  it  has  been  already  devel- 
oped far  beyond  the  expectations  of  all  of  us.  Up  to 
this  time,  or  up,  you  might  say,  to  the  beginning  of  last 
year,  the  mills  were  able,  in  a comparatively  satisfactory 
manner,  to  supply  themselves  with  cotton  from  their 
immediate  districts,  certainly  from  within  the  States  in 
which  they  were  located  ; there  was  no  standard  demand 
for  cotton  from  outside  territory.  Last  year  the  situa- 
tion became  acute  by  reason  of  the  short  crop  ; this  was 
notably  true  in  South  Carolina,  and  wTe  are  liable,  aside 
from  the  fact  that  the  industry  may,  and  undoubtedly 
will,  further  develop,  to  farther  short  crops ; last  year 
can  never  be  pointed  out  as  an  exception  to  all  years  ; 
we  have  had  short  crops  before,  and  we  will  have  short 
crops  in  the  future.  It  certainly  emphasizes  the  fact 
that  we  have  a new  market  in  these  mills,  and  that,  tak- 
ing the  average  conditions  of  the  cotton  crops  in  the 
South,  this  new  market  requires  that  there  shall  be  some 
adjustment  of  the  rates  on  a basis  on  which  these  mills 
can  actually  have  a supply  of  cotton  from  territory  out- 
side of  their  immediate  districts  ; and  even  with  the  full 
crop  of  cotton  in  the  States,  I don’t  think  we  can  take 
the  position  or  say  to  those  mills  that  you  must  exercise 
a control  of  all  the  cotton  in  your  State ; you  must 
underwrite  your  own  ventures  to  the  extent  that  you 
must  keep  out  all  buyers  for  the  New  England  mills,  or 
for  mills  in  foreign  countries,  or  to  the  extent  that  you 
must  be  able  to  supply  your  own  wants  fully  from  your 
own  State.  That  is  an  economic  condition  that  they 
can’t  control.  Therefore,  I think  the  situation  has 


5 


reached  the  point  where  they  must  be  in  a position 
where  they  are  recognized  as  a new  market  for  the  cotton 
grown  in  the  South.  In  a small  committee  which  called 
upon  some  of  us  in  this  matter,  there  were  fifty-eight 
mills  and  $28,000,000  investment  represented,  it  has 
been  suggested  that  probably  the  situation  of  these  mills 
did  not  require  a relative  adjustment  with  respect  to  the 
exports  or  the  New  England  mills,  but  required  a rela- 
tive adjustment  as  among  the  mills  themselves.  That  is 
true,  as  far  as  it  goes,  but  in  that  adjustment,  in  my 
opinion,  you  don’t  get  the  primary  conditions.  The 
primary  condition,  in  my  opinion,  is  the  relation  which 
the  rates  to  these  mills  bear  to  rates  to  other  consuming 
districts,  with  respect  to  raw  cotton,  there  being,  of 
course,  the  other  conditions,  such  as  our  obligations 
under  the  law,  which  require  that  the  rates  shall  be 
relatively  adjusted  as  between  the  mills  themselves  in 
this  part  of  the  country  ; but  the  important  question  is 
the  broader  question,  in  my  opinion.  It  would  be  all  right 
to  restrict  the  question  to  the  narrower  consideration 
of  it  if  the  mills  found  their  market  for  their  products  in 
this  section  of  country  ; it  would  be  then  like  adjusting 
merchandise  rates  as  between  Atlanta,  Macon,  Columbus, 
Augusta,  because  they  all  seek  the  same  territory  for 
distribution.  But  the  territory  to  which  these  cotton 
mills  distribute  their  product  is  not  the  territory  sur- 
rounding the  mills,  in  the  South,  which  requires  this 
relative  adjustment  as  between  the  mills  themselves,  but 
the  distributing  territory  for  these  mills  is  the  world  ; 
it  is  just  as^mucli  the  world  as  it  is  in  the  case  of  New 
England,  or  the  English  mills,  and  it  seems  to  me,  in 
• considering  this  question,  we  must  have  some  considera- 
tion for  what  makes  the  rate  to  New  England,  and  for 
what  makes  the  rate  for  export,  and  not  restrict  it  to  the 
question  of  w~hat  the  rates  shall  be  to  Spartanburg,  say, 
£s  against  the  rate  to  Pacolet,  or  the  rate  to  Augusta,  as 
against  the  rate  to  Griffin.  That  is  the  view  that  we  take 
of  this  question,  and  that  is  the  explanation  in  a general 
way  of  the  figures  which  we  have  submitted.  I am  not 
in  favor  of  what  might  be  called  a milling-in-transit  rate 
for  the  mills ; I do  not  think  that  is  the  way  in  which 
to  adjust  it ; but  I believe  some  consideration  should  be 
given  to  the  combined  cotton  and  cotton  factory  prod- 
ucts rates,  as  against  the  raw  cotton  rate,  say,  to  the 
New  England  mills.  As  I understand  it,  the  amount  of 


6 


domestics,  or  cotton  factory  products,  that  go  direct  to 
the  West  from  this  milling  section,  is  comparatively 
small ; the  main  trade  is  export ; but  there  is  some  of 
the  product,  under  the  conditions  under  which  manu- 
facturing is  done  now  in  the  South,  that  necessarily  goes 
to  New  England,  for  the  purpose  of  bleaching,  etc. 
Therefore,  the  basis  upon  which  we  should  give  the 
most  consideration  to  the  question  is  the  basis  of  rates 
to  Carolina  mills,  compared  with  those  to  New  England 
mills  and  for  export.  And  I trust  the  parties  here  .may 
see  their  way  clear  to  give  their  consent  to  the  proposi- 
tion we  have  made.  I haven’t  got  before  me  the  propo- 
sition submitted,  and  while  it  may  possibly  cover  the 
Carolina  district,  I want  it  clearly  understood  that  we 
are  not  taking  any  position  in  opposition  to  a proper 
adjustment  to  the  other  sections  of  the  South  where 
mills  may  exist.  We  are  dealing  with  this  question 
from  the  standpoint  of  the  Southern  mills,  and  we 
believe  that  conditions  with  respect  to  all  of  .them  should 
be  considered.  But  I am  quite  sure,  from  my  investi- 
gation of  this  matter,  and  from  hearing  people  who  have 
money  invested  in  the  industry,  that  there  is  a feeling  of 
deep  concern  about  the  present  situation,  and  they  look 
confidently  to  the  roads  to  relieve  them  in  a reasonable 
way.  They  very  rightly  point  out  facts  we  all  know, 
that  there  is  a great  deal  in  the  mill  business  for  us,  not 
only  in  the  transportation  of  cotton  to  the  mills  where 
the  rates  must  necessarily  approximate  the  port  rates, 
but  in  the  incidental  business  we  get,  in  the  machinery 
we  haul,  the  construction  material  we  haul,  and  in  all 
that  goes  into  the  manufacture,  to  say  nothing  of  the 
merchandise  business  that  Hows  from  the  mill  centers, 
the  consumption  of  merchandise  in  the  mill  centers,  and 
the  passenger  traffic  that  is  developed.  All  of  these 
items  of  revenue,  of  course,  are  missing  when  we  simply 
haul  raw  cotton  through  our  territory  to  the  port  for 
export,  or  for  the  New  England  district.  Unless  we 
take  this  question  up  seriously,  and  adjust  it  by  recog- 
nizing this  as  a new  market  for  which  adjustment  should 
be  made,  I don’t  see  how  we  can,  with  any  sincerity,  go 
further  into  the  New  England  district  and  urge  the 
removal  of  these  mills  to  the  South;  it  will  never  do  to 
say,  when  it  comes  to  a question  of  cotton  supply:  4 You 
must  look  to  your  own  State  for  that  cotton  ; we  are 
unable  to  do  anything  for  you  from  the  general  district 


7 


from  which  the  New  England  mills  and  the  mills  abroad 
take  their  cotton.’  ” 

The  same  proposition  as  was  made  at  the  meeting  of 
June  5th  and  6th,  as  to  the  reductions  on  Carolina  cotton 
rates,  was  put  to  vote  and  defeated.  Mr.  Finley  then 
made  some  further  remarks,  as  follows  : 

u There  are  not  less  than  $80,000,000  invested  in 
cotton  mills  along  the  Southern  Railway  lines,  and  that 
industry,  as  I have  explained,  has  complained  of  the 
inequitable  adjustment  of  rates  from  the  cotton  territory, 
the  "greater  part  of  which  is  reached  by  the  Southern 
Railway’s  rails.  We  believe  that  if  we  do  not  come  to 
the  relief  of  these  people,  we  can  not,  in  any  court,  or 
before  any  commission,  justify  the  present  adjustment  of 
rates.  We  have  solicited  the  extension  of  the  mills  ; we 
have  solicited  the  location  of  the  mills  ; and  there  is 
nothing  left  for  us  to  do  except  to  avail  ourselves  of  the 
right,  the  privilege,  we  have  under  our  present  organiza- 
tion, of  putting  in  what  we  regard  as  equitable  rates  to 
the  mills  ; we  could  not  stultify  ourselves  to  the  extent 
of  refusing  to  take  that  action  in  behalf  of  the  mills. 
As  has  been  explained,  we  have  not,  in  these  rates,  come 
anywhere  near  meeting  the  figures  that  the  mills  say  will 
be  necessary,  and  we  feel  that  we  have  got  a task  ahead 
of  us  to  satisfy  the  mills  that  the  rates  are  reasonable. 
I don’t  know  that  w^e  will  be  able  to  do  it.  Neverthe- 
less, out  of  consideration  for  the  interests  of  others  in 
this  situation,  and  for  the  purpose  of  bringing  about 
what  we  believe  to  be  relative  rates,  we  are.  willing  to 
stand  upon  these  figures  ; it  is  only  the  force  of  those 
conditions  that  puts  us  in  the  position  where  we  are 
obliged  to  take  action  in  this  matter.  I don’t  want  our 
position  misunderstood.  I don’t  want  it  thought  for  a 
moment  that  we  are  taking  this  position  to  be  arbitrary, 
or  taking  it  in  disregard  of  what  others  may  regard  as 
their  rights,  but  this  is  an  important  question  with  us, 
and  I think  it  is  an  important  question  with  every  line 
here.  Other  interests  may  not  be  under  pressure  in 
other  directions  at  this  time,  but  as  sure  as  we  all  sit 
here,  there  is  going  to  be  a common  interest  in  it  before 
we  get  through  with  it,  and  I am  quite  sure  the  question 
of  the  adjustment  of  the  rates  can  not  be  delayed  further. 
It  won’t  do  to  go  into  another  season  on  the  basis  that 
has  prevailed  in  the  past ; there  must  be  an  intelligent 


8 


and  reasonable  adjustment  of  these  rates,  made  with 
respect  to  this  coming  season.  It  is  only  in  that  spirit 
that  we  may  take  action  with  respect  to  this  matter.” 
(Southeastern  Freight  Association  Circular  Letter  No. 
12,  Series  1900-1901.) 

The  rates  on  the  reduced  basis,  as  proposed  by  the 
Southern  Railway,  were  forced  in  by  that  road  and 
became  effective  September  1st.  Other  Mississippi, 
Tennessee,  and  Alabama  lines  later  on  reduced  their 
rates  to  Gulf  ports  and  New  England  territory  to  save 
their  cotton  traffic,  and,  as  a consequence,  their  merchan- 
dise traffic,  from  this  action  of  the  Southern  Railway, 
the  result  being  that  cotton  at  the  present  time  is 
hauled  from  many  places  to  Gulf  ports  and  eastern 
points  at  from  15  to  60  cents  per  bale  less  than  last  year. 
In  view  of  the  higher  price  for  cotton  which  the  producer 
receives  this  year,  and  the  decrease  in  business  for  the 
railroads  consequent  to  the  short  crop,  this  does  not 
appear  to  be  a j udicious  course  for  those  entrusted  with 
the  charge  of  these  important  interests  to  pursue. 

Subsequent  meetings  were  held  with  a view  of  having 
the  Southern  Railway  recede  from  its  position,  but  to 
no  purpose.  Finally,  as  the  situation  became  grave  and 
threatened  to  become  more  so,  by  the  other  lines  making 
further  reductions  in  their  rates  to  save  their  business, 
the  Southern  Railway,  at  a meeting  held  in  St.  Louis 
October  4th,  agreed  to  arbitrate  the  question  as  to  what 
are  fair  and  equitable  rates  to  apply  from  Alabama, 
Tennessee,  and  Mississippi  junctions  to  Carolina  mill 
points.  It  is  thus  that  this  question  has  come  before  the 
arbitrators. 

As  to  whether  the  existing  rates  prior  to  September 
1st  from  the  Mississippi  junctions  to  the  Carolina  mills, 
were  adjusted  on  a supposedly  fair  relative  basis  to  those 
charged  to  the  Gulf  ports,  or  to  New  England  territory, 
we  do  not  know.  Mr.  Culp,  the  traffic  manager  of  the 
Southern  Railway,  says  they  were  not  so  adjusted  ; that 


9 


they  were  ua  continuation  of  figures  which  did  not  in 
themselves  represent  any  defined  basis.”  However  this 
may  be,  they  were  the  rates  which  the  Southern  Railway 
or  its  predecessor,  the  Richmond  & Danville,  by  its  own 
voluntary  act  established  without  let  or  hindrance  from 
other  lines,  and  inasmuch  as  its  line  extended  then  as  it 
extends  now,  all  the  way  from  these  same  Mississippi 
junctions  to  the  Carolina  mills,  it  is  reasonable  to  sup- 
pose the  rates  were  so  adjusted  as  to  enable  it  to  take  a 
fair  share  of  the  business  between  stations  on  its  own 
line,  whereby  it  was  enabled  by  so  doing  to  get  its  long 
and  most  remunerative  haul.  If  not,  what  was  the  line 
extended  for  from  Columbus,  or  from  West  Point  west 
to  the  Mississipjri  River,  and  why  were  the  rates  thus 
established  ? Cotton  was  then,  as  it  is  now,  one  of  the 
principal  commodities  offered  for  shipment. 

As  is  well  known,  branch  lines  or  extensions  are  not 
bought  nor  built  for  what  they  can  do  for  themselves  ; it 
is  rarely  that  one  of  them  is  self-supporting,  per  se. 
They  are  bought  and  built  generally  for  the  aid  and 
support  they  can  give  the  main  stem,  by  throwing  a 
volume  of  traffic  thereon,  which,  on  account  of  the 
existing  plant,  equipment,  and  other  capabilities,  can  be 
handled  cheaply.  Why  should  not  this  be  true  of  the 
Southern  Railway’s  extension  west  through  the  State  of 
Mississippi,  and  why  should  it  not  be  true  that  the  rates, 
first  established  by  that  line  for  the  movement  of  its 
staple  product  in  the  State  were  so  adjusted  that  it  could 
control  a fair  share  of  the  business  on  its  long  haul 
between  its  own  stations  as  against  a shorter  haul  to 
other  less  remunerative  destinations  ? A contrary  course 
would  be  entirely  incompatible  with  any  theory  or  prac- 
tice of  traffic  operation  within  our  knowledge. 

The  rates  enforced  by  the  Southern  Railway  from 
Alabama,  Tennessee,  and  Mississippi  to  the  Carolina 
mills,  Group  2,  and  the  amount  of  reductions  that  these 
produce  on  the  rates  in  effect  prior  to  September  1st,  are 
as  follows : 


10 


TO  GROUP  NO.  2,  CAROLINA 

FROM 


Southern  Railway’s 
Enforced  Rate. 


MILLS. 

Amount  of  Reductions. 


Memphis,  Term. 

Huntsville,  A’a. 

Decatur,  Ala. 

Florence,  Ala. 

Sheffield,  Ala. 

Tuscumbia,  Ala. 

Corinth,  Miss. 

Grand  Junction,  Te 
Somerville,  Tenn. 

Selma,  Ala. 

Montgomery,  Ala. 

Chattanooga,  Tenn. 

Anniston,  Ala. 

Oxford,  Ala. 

Birmingham,  Ala. 

Bessemer,  Ala. 

Oxanna,  Ala. 

Alabama  City,  Ala. 

Attalla,  Ala. 

Gadsden,  Ala. 

Pell  City,  Ala. 

Jenifer,  Ala. 

Munford,  Ala. 

Columbiana,  Ala. 

Calera,  Ala. 

Talladega,  Ala. 

Curry,  Ala. 

Barclays,  Ala. 

Childersburg,  Ala. 

Meridian,  Miss. 

Maplesville,  Ala. 

York,  Ala. 

Akron,  Ala. 

Blockton,  Ala. 

Cordova,  Ala. 

Parrish,  Ala. 

Columbus,  Miss. 

West  Point,  Miss. 

Winona,  Miss. 

Greenwood,  Miss. 

Morehead,  Miss. 

Elizabeth,  Miss. 

Greenville,  Miss. 

Vicksburg,  Miss. 

New  Orleans,  La. 

Mobile,  Ala.* 

* Compressed  at  shipper’s  expense, 


42  cts. 

per 

100  lbs. 

17  cts.  per 

100  lbs. 

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11 


Group  No.  1 takes  5 cents  higher  rates,  and  therefore 
the  reductions  to  that  territory  are  5 cents  less  than 
those  shown. 

Mr.  Finley,  in  his  statement,  alleges  as  the  first  reason 
for  the  sweeping  reductions,  that  owing  to  the  growth  of 
the  Carolina  mills,  and  on  account  of  short  crops,  and 
liability  of  future  short  crops,  these  mills  are  not  able  to 
supply  themselves  with  cotton  from  within  the  States  in 
which  they  are  located,  notably  South  Carolina,  and 
that,  considering  the  average  conditions  of  cotton  crops 
in  the  South,  these  Carolina  markets  require  there  shall 
be  such  an  adjustment  of  the  rates  as  will  enable  the 
mills  to  get  a supply  of  cotton  from  territory  outside  of 
their  immediate  districts. 

Let  us  see  how  far  this  is  true.  The  reports  of  the 
United  States  Department  of  Agriculture  for  the  follow- 
ing named  years,  except  1899-1900,  which  is  taken  from 
the  report  of  the  secretary  of  the  New  Orleans  .Cotton 
Exchange,  show  the  total  crop  of  these  States,  together 
with  the  mill  purchases,  as  follows  : 

NORTH  CAROLINA. 


(In  Commercial  Bales.) 


Years. 

Total  Crop. 

Bought 

by 

Mills. 

Surplus. 

Percentage 

of 

Surplus. 

1895-96  

...  397,752 

219,822 

177,930 

44.7 

1896-97  

...  521,795 

245,177 

276,618 

53. 

1897-98  

...  646,726 

334,873 

311,853 

48. 

1898-99  

...  629,620 

374,891 

254,729 

40. 

1899-1900 

...  561,000 

435,686 

125,314 

22.3 

SOUTH 

CAROLINA. 

(In  Commercial  Bales.) 

Years. 

Total  Crop. 

Bought 

by 

Mills. 

Surplus. 

Percentage 

of 

Surplus. 

1895-96  

...  764,700 

257,700 

507,000 

66.4 

3896-97  

...  936,463 

297,782 

638,681 

68. 

1897-98  

...1,030,085 

398,456 

631,629 

61. 

1898-99  

...1,035,414 

466,181 

569,233 

55. 

1899-1900  _ . 

...  921,000 

497,146 

423,854 

46. 

12 


GEORGIA. 

(In  Commercial  Bales.) 


Bought  Percentage 

Years.  Total  Crop.  by  Surplus.  of 

Mills.  Surplus. 

1895- 96  . 1,067,377  200,636  866,741  81. 

1896- 97  1,299,340  227,831  1,071,509  82. 

1897- 98  1,350,781  285,219  1,065,562  79. 

1898- 99  1,378,731  281,527  1,097,204  79.5 

1899- 1000 1,309,000  339,110  969,890  74. 


The  contention  of  the  Southern  Railway  that  there  is 
not  enough  of  cotton  within  the  Carolinas  to  supply  the 
mills  is  scarcely  warranted  by  this  showing.  Taking  last 
season,  for  example,  when  the  crop  was  shorter  than  it 
has  been  since  1895,  there  was  a surplus  over  the  mill 
consumption  in  the  Carolinas  of  549,168  bales,  notwith- 
standing the  fact  that  the  mills  bought  nearly  100,000 
bales  in  excess  of  their  purchases  of  any  previous  year. 
Nor  is  this  the  full  extent  of  the  surplus  of  the  States 
named.  The  mill  purchases  of  North  Carolina  from  other 
States  the  past  season,  included  in  the  above  figures, 
were  100,000,  and  of  South  Carolina,  42,000  (both  partly 
estimated),  which,  if  deducted  from  the  total  amount 
bought,  would  swell  the  surplus  of  those  States  142,000 
bales  more. 

Mr.  Finley,  speaking  on  June  27th,  says,  “Up  to  this 
time,  or  up,  you  might  say,  to  the  beginning  of  last 
year,  the  mills  were  able  in  a comparatively  satisfactory 
manner  to  supply  themselves  with  cotton  from  their 
immediate  districts  ; certainly  from  within  the  States 
in  which  they  are  located : . . . . Last  year  the 

situation  became  acute,  by  reason  of  the  short  crop ; 
this  was  notably  true  in  South  Carolina.” 

We  are  at  a loss  to  understand  how  this  statement 
can  be  reconciled  with  the  facts  as  they  appear  above. 
The  situation  in  South  Carolina  “acute,”  with  a surplus 
after  the  mills  Were  fully  supplied,  though  working 
night  and  day,  of  423,854  bales,  or  46  per  cent  of  the 
entire  crop.  Admitting,  for  the  sake  of  argument,  that 


13 


the  situation  was  “acute,”  what  was  to  prevent  the 
Carolina  mill  owners  from  getting  their  cotton  in  the 
adjoining  State  of  Georgia,  where,  as  may  be  seen  from 
the  above  figures,  there  has  been  an  average  surplus  of 
over  1,000,000  bales  each  year  since  1895?  It  would 
seem  the  natural  order  for  mills  to  get  their  supplies  at 
low  rates  from  contiguous  territory  where  there  is  a 
large  surplus,  rather  than  from  more  distant  territory, 
from  which  rates  must  necessarily  be  higher. 

We  think  a more  reasonable  and  a more  equitable 
course  for  the  Southern  Railway  to  pursue  would  be  to 
so  readjust  its  rates  from  this  Georgia  territory  as  would 
enable  the  Carolinas  to  draw  upon  it  for  so  much  of  this 
large  surplus  as  they  might  need,  and  not  break  down 
the  rate  basis  700  miles  away,  entailing  hundreds  of 
thousands  of  dollars  loss  to  the  other  lines  in  interest. 
The  Southern  Railway  runs  402  miles  from  the  extreme 
northwest  via  Atlanta,  to  the  extreme  southeast  of 
Georgia.  It  also  runs  from  the  extreme  northeast  via 
Atlanta,  to  the  middle  southwest,  besides  ramifying  the 
State  in  other  directions  with  its  branch  lines.  It  has 
control  of  enough  of  cotton  on  its  own  Georgia  lines, 
besides  that  which  comes  to  its  junctions,  notably  at 
Atlanta,  to  supply  the  demand  of  the  Carolinas  long  after 
they  consume  their  own  supply,  and  it  can  not  well  be 
said  that  it  is  estopped  from  doing  this  by  State  rates 
or  State  commissions,  inasmuch  as  the  action  outlined 
would  be  of  an  interstate  character. 

But  Mr.  Finley  says  that  “even  with  a full  crop  of 
cotton  in  the  States  (meaning  the  Carolinas),  I don’t 
think  we  can  take  the  position,  or  say  to  those  mills, 
that  you  must  exercise  a control  of  all  the  cotton  in  your 
State  ; you  must  underwrite  your  own  ventures  to  the 
extent  that  you  must  keep  out  all  buyers  for  the  New 
England  mills,  or  for  mills  in  foreign  countries,  or  to  the 
extent  that  you  must  be  able  to  supply  your  own  wants 
fully  from  your  own  State  ; this  is  an  economic  condition 
that  they  can  not  control.” 


14 


It  is  an  economic  condition,  but  it  is  one  that  can  be 
controlled  much  easier  by  the  Carolina  mills  with  the 
aid  of  the  Southern  Railway,  than  can  the  economic  con- 
dition of  reaching  out  to  territory  600  or  700  miles  away, 
and  therein  competing  with  markets  and  conditions  that 
were  in  existence  long  before  the  Carolina  mills  were 
established.  We  do  not  question  their  right  to  compete 
for  the  business  in  an  equitable  and  reasonable  manner, 
even  though  they  are  surrounded  with  a plentiful  supply 
nearer  home  ; but  we  do  object,  and  solemnly  protest 
against  such  a reckless  competition  as  has  a tendency  to 
tear  down  all  standards  of  rates  and  revenues  of  the 
other  lines,  which,  through  time,  experience,  and  an 
enlightened  knowledge  of  the  requirements,  have  been 
long  established. 

If  it  is  an  economic  condition  that  they  can  not  control, 
it  is  because  the  price  of  cotton  in  the  immediate  vicinity 
of  the  mills,  plus  the  rates,  is  greater  than  is  the  price  of 
cotton  plus  the  rates  in  Mississippi  700  miles  away. 
And  is  it  not  a fact  that  the  active  competition  of  the 
236  mills  ot*  North  Carolina,  and  the  131  mills  of  South 
Carolina,  between  themselves,  in  the  purchase  of  cotton, 
raises  the  price  to  a degree  as  to  make  them  desirous  of 
entering  other  cheaper  fields  ? Should  the  railroads  be 
expected  to  equalize,  by  their  rates,  disadvantages  of 
this  character  brought  on  by  the  acts  of  the  mill  opera- 
tors ? If  the  Mississippi  and  Alabama  railroads  have  in 
the  past,  by  conservative  and  judicious  action,  built  up 
and  maintained  to  Gulf  ports  and  to  New  England  terri- 
tory, reasonable  rates  that  may  be  fairly  remunerative,  is 
it  proper  that' the  Southern  Railway  should  enforce  upon 
them  a system  of  rates  ruinously  low,  to  satisfy  the 
unreasonable  and  illegitimate  demands  of  its  cotton 
mills  ? The  demands  are  unreasonable  and  illegitimate, 
inasmuch  as  over  58  j>er  cent  of  the  amount  bought  in 
the  year  of  greatest  consumption  yet  remained  in  the 
Carolinas  which  could  be  purchased  by  them  ; and  if  we 
add  to  this  the  surplus  in  the  adjoining  State  of  Georgia, 


15 


which  should  be  accessible  at  much  lower  rates  than  the 
cotton  from  Alabama  or  Mississippi,  we  have  a surplus 
of  162  per  cent  of  the  amount  consumed  not  yet  trenched 
upon.  This  showing,  it  should  be  remembered,  is  for 
a year  of  minimum  production  and  maximum  consump- 
tion. 

How  far  a remedy  for  this  situation  would  lie  in  a 
proper  relative  adjustment  of  the  rates  as  between  the 
mills  themselves,  we  do  not  know,  but  as  the  rates  were 
generally  reduced  from  Georgia,  and  afterwards  made 
5 cents  per  hundred  less  to  some  of  the  mills  than  to 
others,  it  is  very  evident  there  was  more  or  less  dissatis- 
faction with  them.  Mr.  Finley  says  on  this:  “It  has 
been  suggested  that  probably  the  situation  of  these  mills 
did  not  require  a relative  adjustment  with  respect  to  the 
exports  or  the  New  England  mills,  but  required  a rela- 
tive adjustment  as  among  the  mills  themselves.”  He 
then  answers  this  by  saying,  “That  is  true  as  far  as  it 
goes,  but  in  that  adjustment,  in  my  opinion,  you  do 
not  get  at  the  primary  conditions.”  He  inferential ly 
acknowledges  here  that  there  was  not  a proper  relative 
adjustment  as  between  the  mills  themselves,  and  we  can 
well  understand  this  when  he  says:  “In  a small  com- 
mittee which  called  upon  us  in  this  matter,  there  were 
fifty-eight  mills  and  $28,000,000  of  investment  repre- 
sented.” As  North  Carolina  is  reported  to  have  236 
mills,  and  South  Carolina  131,  having  an  investment,  as 
Mr.  Finley  says,  of  not  less  than  $80,000,000,  where  were 
the  representatives  of  the  remaining  309  mills,  and  the 
$52,000,000  of  investment  \ Why  did  they,  having  much 
the  larger  interest,  not  complain  ? The  alleged  grievances 
of  15  per  cent  of  the  Carolina  mills,  which,  if  actual, 
could,  in  all  probability,  be  redressed  by  the  Southern 
Railway  within  the  confines  of  the  complainants’  States, 
or  at  least  in  the  neighboring  State  of  Georgia,  are  here 
made  the  basis  of  such  radical  action  as  threatens  the 
safety  of  millions  of  dollars  of  the  property  of  some  of 
these  Mississippi  lines. 


16 


As  may  be  seen  from  the  map  of  Mississippi,  the  main 
line  of  the  Southern  Railway  crosses  the  Illinois  Central 
and  Yazoo  & Mississippi  Valley  railroads  at  West  Point, 
Winona,  Greenwood,  Morehead,  Elizabeth,  and  Green- 
ville, and  parallels  them  from  Aberdeen  to  Tchula,  a 
distance  of  135  miles.  The  Memphis  & Charleston  divis- 
ion of  the  Southern  Railway  crosses  the  Illinois  Central 
farther  north,  at  Grand  Junction,  and  intersects  it  and 
the  Yazoo  & Mississippi  Valley  Railroad  at  Memphis. 

The  reduction  made  by  the  Southern  Railway  from 

Grand  Junction,  is 

West  Point 

Winona 

Greenwood  

Elizabeth 

« Greenville 

We  can  readily  understand  that  the  other  roads  must 
make  reductions  in  their  rates  to  Gulf  ports  or  New 
England  territory  in  order  to  hold  their  share  of  the 
traffic.  It  is  not  alone  the  junction  station  that  is  affected 
by  these  reductions,  for  as  the  reduced  rates  apply 
equally  to  the  local  stations  of  the  Southern  Railway  on 
each  side  of  the  junction,  it  follows  that  the  local  sta- 
tions of  the  other  roads  for  at  least  forty  miles  on  either 
side  of  the  junction  will  be  directly  affected  by  them. 
Cotton  does  not  grow  at  the  stations  ; it  is  raised  in  the 
outlying  country,  and  it  is  a well-known  fact  that  the 
offer  of  one-quarter  or  even  one-eighth  of  a cent  a pound 
higher  price  will  divert  cotton  from  its  accustomed 
channel  of  trade  as  much  as  twenty  or  thirty  miles. 

Nor  is  it  solely  the  cotton  traffic  that  must  be  con- 
sidered in  this  matter.  Where  the  farmer  sells  his 
cotton,  there  he  will  purchase  his  merchandise,  machin- 
ery, and  other  supplies,  so  that  the  loss  of  the  cotton  at 
any  station  means  also  the  loss  of  nearly  all  other 
freight. 

The  southern  cotton-carrying  railroads,  therefore,  no 
matter  what  the  rates,  can  never  permit  the  diversion  of 


1.65  per  bale. 
1.10  “ 

.90  “ 

.90  “ 

1.45  “ 

1.05  “ 


17 


cotton  from  their  stations  that  is  naturally  and  thirl y 
tributary  to  them,  without  sacrificing  other  business.  If 
they  did  the  result  would  be  that  the  towns  upon  which 
they  are  dej)endent  for  business  would  fall  into  ruin 
and  hopeless  decay,  while  the  rival  towns,  their  com- 
petitors, would  thrive  and  grow  prosperous.  We  all 
know  that  the  town  which  once  attains  a commercial 
supremacy  over  a competitor  progresses  thereafter  in  a 
much  greater  ratio  than  does  the  other.  It  is  for  these 
reasons  that  a railroad  must  scrupulously  guard  its  local 
station  rates,  particularly  so  when  the  outlying  territory 
may  be  served  by  a rival  line. 

Then  again,  as  the  Illinois  Central  Railroad  observes 
the  long  and  short  haul  clause  of  the  interstate  com- 
merce act,  except  in  cases  of  water  competition,  and  a 
few  other  exceptional  instances,  a reduction  of  cotton 
rates  from  a junction  to  New  Orleans  or  to  New  England 
territory  would  carry  with  it  a reduction  from  inter- 
mediate stations. 

The  reductions  of  rates  on  our  lines  which  the  action 
of  the  Southern  Railway  has  necessitated  extend  from 
Alexander,  Tenn.,  to  Crystal  Springs,  Mission  our  main 
line,  a distance  of  354  miles.  These  reductions  on  New 
England  shipments  vary  from  25  cents  to  60  cents  per 
bale.  On  New  Orleans  shipments  they  vary  from  15 
cents  to  45  cents  per  bale.  On  the  Aberdeen  branch,  109 
miles,  our  reductions  are  60  cents  per  bale  to  New 
Orleans,  and  from  25  to  45  cents  per  bale  to  New  Eng- 
land. On  our  Grenada  district,  100  miles,  the  reductions 
are  40  cents  per  bale  to  New  England.  On  our  Yazoo  and 
Tchula  branches,  141  miles,  the  reductions  run  from  25 
to  60  cents  per  bale  to  New  England.  As  the  rates  from 
Memphis  to  the  Gulf  have  been  reduced  as  much  as  50 
cents  per  bale,  and  as  the  rates  of  the  Yazoo  & Mississippi 
Valley  Railroad  are  based  largely  on  the  Memphis  rates, 
we  were  obliged  to  make  reductions  of  50  cents  per  bale, 
both  to  New  England  and  to  New  Orleans,  from  long 
stretches  of  territory  on  that  une.  Notwithstanding  We 


18 


confine  these  reductions  to  the  lowest  possible  minimumr 
yet  it  will  be  seen  they  are  very  serious. 

The  Illinois  Central  and  Yazoo  & Mississippi  Yalley 
railroads  move  annually,  according  to  crop  conditions, 
from  1,100,000  to  1,300,000  bales  of  cotton.  It  would 
not  be  too  much  to  say  that,  based  upon  the  above 
figures,  the  average  reduction  is  now  35  cents  per  bale. 
This  approximates  a loss  of  $420,000  per  year  of  net 
revenue.  As  the  3J  per  cent  bonds  of  the  Illinois  Cen- 
tral Company  are  selling  above  par  in  the  markets  of  the 
world,  this  yearly  loss  capitalized  is  equivalent  to  de- 
stroying outright  $12,000,000  worth  of  its  property. 

It  will  thus  be  seen  that  in  view  of  the  large  traffic 
affected,  if  the  Illinois  Central  and  Yazoo  & Mississippi 
Yalley  railroads,  in  order  to  protect  their  cotton  traffic, 
are  ever  obliged  to  make  to  their  markets  of  destination 
corresponding  reductions  in  their  rates  to  those  made  by 
the  Southern  Railway  to  the  Carolina  mills,  the  loss’  of 
revenue  and  destruction  of  property  will  be  enormous. 
If,  as  is  reported,  the  Southern  Railway  took  cotton 
freely,  under  the  old  adjustment  of  rates,  it  would  seem 
that  self-protection  would  render  it  necessary  that  the 
other  lines  should  make  corresponding  reductions.  In 
their  desire  to  save  revenue  they  have  not,  however, 
gone  so  far,  but  the  present  operation  of  their  reduced 
rates  is  only  experimental,  and  it  may  be  that  tlieir 
experience  with  them  will  demonstrate  the  necessity  of 
making  reductions  to  the  full  figures  made  by  the 
Southern  Railway. 

The  measure  of  reductions  to  be  made  in  these  rates 
to  meet  the  action  of  the  Southern  Railway  is  not  what 
the  traffic  manager  of  any  one  line  may  think  its  inter- 
ests will  stand.  All  will  have  to  be  governed  by  the 
views  and  action  of  the  line  whose  interests  will  suffer 
most  by  the  reduction.  The  strength  of  the  chain  has  to 
be  tested  by  its  weakest  link.  For  instance,  if  the 
Mobile  & Ohio  or  the  Kansas  City,  Memphis  & Birming- 
ham railroads  should  feel  that  the  proper  protection 


19 


of  their  interests  at  Columbus,  Aberdeen,  Starkville,  or 
West  Point  required  reductions  in  consonance  with 
those  made  by  the  Southern  Railway,  there  would  be  no 
alternative  for  the  Illinois  Central,  no  matter  what  its 
traffic  officials  thought,  but  to  follow  them  with  like 
reductions  from  the  same  stations,  or  other  stations 
thereby  affected. 

Mr.  Finley,  however,  again  shifts  his  position,  and 
this  time  we  are  served  with  his  main  reason  for  the  very 
radical  and  sweeping  reductions  which  he  has  made  in 
these  cotton  rates.  He  says  : 

“The  primary  condition,  in  my  opinion,  is  the  rela- 
tion which  the  rates  to  these  mills  bear  to  rates  to  other 
consuming  districts  with  respect  to  raw  cotton,  there 
being,  of  course,  the  other  conditions,  such  as  our  obliga- 
tions under  the  law,  which  require  that  the  rates  shall  be 
relatively  adjusted  as  between  the  mills  themselves  in 
this  part  of  the  country,  but  the  important  question  is 
the  broader  question,  in  my  opinion.  The  territory  to 
which  these  cotton  mills  distribute  their  product  is  not 
the  territory  surrounding  the  mills  in  the  South  which 
requires  this  relative  adjustment  as  between  the  mills 
themselves,  but  the  distributing  territory  for  these  mills 
is  the  world  ; it  is  just  as  much  the  world  as  it  is  in  the 
case  of  New  England  or  the  English  mills,  and  it  seems 
to  me,  in  considering  this  question,  we  must  have  some 
consideration  for  what  makes  the  rate  to  New  England, 
and  for  what  makes  the  rate  for  export,  and  not  restrict 
it  to  the  question  of  what  the  rates  shall  be  to  Spartan- 
burg, say,  as  against  the  rate  to  Pacolet,  or  the  rate  to 
Augusta  as  against  the  rate  to  Griffin.  This  is  the  view 
we  take  of  this  question,  and  this  is  the  explanation,  in 
a general  way,  of  the  figures  we  have  submitted.  I 
believe  some  consideration  should  be  given  to  the  com- 
bined cotton  and  cotton-factory-products  rates  as  against 
the  raw-cotton  rate,  say,  to  the  New  England  mills.” 

The  primary  and  chief  consideration,  therefore,  which 
actuated  the  Southern  Railway  in  this  action  of  reducing 
rates  from  Alabama,  Tennessee,  and  Mississippi  territory 
was  to  put  the  Carolina  mills  on  a parity  with  other  con- 
suming districts,  and  in  determining  what  the  rates 


20 


should  be  to  the  Carolinas  due  cognizance  was  no  doubt 
taken  of  the  New  England  rate  and  the  export  rate.  If 
this  principle  obtains  with  the  Southern  Railway  we 
assume  it  is  willing  to  accord  the  same  privilege,  under 
like  conditions,  to  other  lines  whose  interests  lie  in  haul- 
ing cotton  to  markets  other  than  those  of  the  Carolina 
mills. 

The  following  is  a statement  from  the  United  States 
Agricultural  Department  of  the  total  cotton  crop,  total 
mill  purchases,  and  mill  purchases  from  other  States,  for 
the  Carolinas,  for  the  seasons  named : 

NORTH  CAROLINA. 


(In  Commercial  Bales.) 

Percentage 
Mill  of  Mill 

Total  Purchases  Consumption 

Year.  Total  Crop.  Mill  from  other  taken  from 

Consumption.  States.  other  States* 

1896- 97  521,795  322,046  43,350  13.4 

1897- 98  646,726  334,873  52,596  15.7 

1898- 99  629,620  374,891  71,392  19. 

SOUTH  CAROLINA. 

(In  Commercial  Bales.) 

1896- 97  936,463  297,782  24,637  8. 

1897- 98  1,030,085  398,456  1,581  .4 

1898- 99  1,035,414  466,181  10,953  2.3 


We  are  not  able  to  give  the  mill  purchases  from  other 
States  for  the  last  season,  as  they  are  not  yet  published. 
If  we  estimate  for  North  Carolina  an  increase  for  last 
year  in  mill  purchases  from  other  States,  29,000  bales, 
which  is  10,000  in  excess  of  any  prior  year  s increase,  it 
will  give  100,000  bales  of  mill  purchases  as  having  been 
received  from  other  States.  This  would  be  26  per  cent 
of  the  mill  consumption. 

The  mill  purchases  of  South  Carolina  increased  the 
past  season  31,000  bales.  If  we  assume  that  this  increase 
had  to  be  taken  entirely  from  other  States,  it  would  maker 
by  adding  to  it  the  total  mill  purchases  of  the  previous 
year,  about  42,000  bales.  This  would  amount  to  less  than 


21 


9 per  cent  of  tlie  total  consumption  of  the  South  Carolina 
mills  as  having  come  from  other  States.  In  the  previous 
year  it  vvill  be  observed  the  mill  purchase  from  other 
States  slightly  exceeded  2 per  cent.  If  we  are  correct  in 
this  estimate  — and  at  the  worst  the  figures  can  not  be 
much  out  of  the  way  — of  the  total  cotton  consumed  by 
the  North  Carolina  mills,  74  per  cent  of  it  was  cotton 
raised  in  that  State,  and  of  the  total  mill  consumption  of 
South  Carolina,  91  per  cent  was  cotton  grown  in  that 
State.  Of  this  74  per  cent  of  the  mill  consumption  of 
North  Carolina  (or  322,407  bales),  which  was  taken  from 
its  own  State,  how  much  of  it  paid  any  railroad  rate  at 
all  ? Of  the  91  per  cent  of  the  total  mill  consumption  of 
South  Carolina  (or  452,402  bales),  grown  in  that  State, 
how  much  of  it  paid  any  railroad  transportation?  We 
all  know  that  the  mills  in  these  States  are  generally 
located  in  the  heart  of  the  cotton  district,  and  we  are  of 
the  opinion  it  would  not  be  too  far-fetched  to  say  that, 
on  the  average,  50  per  cent  of  the  cotton  grown  in  these 
States  consumed  by  the  mills  is  brought  to  towrn  in 
wagons  and  pays  no  railroad  transportation.  The  remain- 
ing 50  per  cent  pays  railroad  transportation,  but,  of 
course,  on  account  of  the  short  distance  hauled,  the 
charges  are  nothing  like  what  they  are  to  New  England 
territory  or  European  countries,  a thousand  to  three 
thousand  miles  away.  Mr.  Culp,  the  traffic  manager  of 
the  Southern  Railway,  says  the  rates  to  the  mills  will 
average  $1  per  bale  from  points  within  the  States. 

Now,  if  it  is  right  for  the  Southern  Railway,  as 
stated  by  Mr.  Finley,  to  insist  that  the  rates  to  the 
Carolina  mills,  with  respect  to  raw  cotton,  shall  bear  a 
proper  relation  to  the  rates  to  other  consuming  districts, 
is  it  not  equally  right  for  the  other  lines,  operating  in 
Alabama  and  Mississippi,  and  who  have  no  interest  in 
the  Carolina  mills,  to  insist  that  the  rates  to  the  consum- 
ing districts  and  marts  of  trade  which  they  serve  shall 
bear  a proper  relation  to  the  rates  charged  on  the  larger 
proportion  of  this  cotton  consumed  by  the  Carolina  mills  ? 


22 


If  it  is  proper  for  the  Southern  Railway,  in  order  to 
obtain  26  per  cent  of  the  mill  consumption  of  North 
Carolina,  and  9 per  cent  of  the  mill  consumption  of 
South  Carolina,  to  come  west  700  miles  and  say  to  the 
lines  traversing  that  territory  “we  shall  insist  upon 
such  rates  for  this  small  proportion  of  the  mill  con- 
sumption of  our  States  as  will  fully  enable  them  to 
compete  with  your  consuming  centers,”  would  it  not  be 
equally  proper  for  the  Alabama  and  Mississippi  lines  to 
insist  upon  putting  their  consuming  centers  on  as  good 
a relative  plane  as  the  Carolina  mills  enjoyed  on  74 
per  cent  and  91  per  cent  of  their  cotton  by  having  to 
pay  no  rates  on  possibly  half  their  cotton,  and  com- 
paratively low  rates,  or  $1  per  bale,  on  nearly  all  of 
the  remainder?  If  this  principle  of  rate-making  is  right 
to  apply  to  one  consuming  center,  why  not  to  other 
consuming  centers  ? 

By  reason  of  the  fact  that  the  New  England  mills 
have  to  pay  high  rates  on  100  per  cent,  or  all  of  their 
cotton,  the  rates  being,  from  Mississippi  on  our  line, 
80  to  95  cents  per  hundred,  the  rates  from  Texas  com- 
mon points,  $1  a hundred,  is  it  not  a little  far-fetched 
for  the  Southern  Railway  to  set  up  the  plea  that,  though 
74  and  91  per  cent  respective^  of  the  North  and  South 
Carolina  consumption  is  obtained  at  home,  with  possibly 
50  per  cent  of  this  paying  no  rates  at  all,  and  the 
remainder  comparatively  low  rates  by  reason  of  the 
short  distance  hauled,  yet  on  the  9 per  cent  of  the  one 
State  and  the  26  per  cent  of  the  other,  it  must  have 
rates  that  are  below  the  rates  on  100  per  cent  of  the 
cotton  of  the  other  lines  to  their  consuming  districts  as 
much  as  $1.80,  $2.25,  and  $2.50  per  bale  ? The  Southern 
Railway’s  rate  from  Winona  to  the  Carolinas  is  $2.50 
per  bale,  out  of  which  it  pays  50  cents  for  compression  ; 
the  Illinois  Central’s  rate  from  Winona  to  New  England 
was,  prior  to  the  Southern  Railway’s  reduction,  $4.30 
per  bale,  out  of  which  it  paid  50  cents  for  compression, 
leaving  a difference  in  favor  of  the  Carolina  mills  of 


23 


$1.80  per  bale.  This  difference,  of  course,  would  be 
further  increased  as  our  rates  get  higher,  to  95  cents,  to 
New  England  territory. 

It  may  be  of  interest  to  give  here  the  movement  of 
cotton  overland  to  New  England  mills  for  the  past  year. 

OVERLAND  MOVEMENT  ACROSS  THE  POTOMAC  AND 
OHIO  RIVERS  AND  THE  MISSISSIPPI 
RIVER  ABOVE  CAIRO. 

SHIPPED  FROM  AND  VIA  1899-1900 

St.  Louis 865,107 

Hannibal  and  other  points  above  St.  Louis.  36,695 

Cairo 226,421 

Louisville  211,877 

Evansville 1,685 

Shipments  from  other  points  on  Ohio  and 

Mississippi  rivers  not  elsewhere  included  14,982 

Virginia  points 99,704 

Cincinnati  receipts  by  rail  and  river  not 

elsewhere  counted 135,652 

Shipped  to  mills  on  Ohio  River  not  in- 
cluded above 11,318  1,603,441 


Less: 

Shipments  from  Cairo  and  Paducah  at 

St.  Louis 23,190 

St.  Louis  to  New  Orleans  and  Memphis  by 

river  and  local  consumption 5,811 

St.  Louis  and  Cairo  to  Newport  News, 

Norfolk,  etc.,  via  Cincinnati,  etc.,  and 

St.  Louis  to  Pensacola 46,863 

St.  Louis  to  and  via  Louisville,  etc 1,923 

Cincinnati  to  Southern  mills  and  New 

Orleans 1,783  79,570 


Deduct:  1,523,871 

Inland  shipments  across  Mississippi,  Ohio, 

and  Potomac  rivers  from  New  Orleans.  17,262 

Mobile 7,482 

Galveston 480 

Receipts  by  Rail  Overland  at: 

New  York 80,713 

Boston 118,891 

Philadelphia 36,206 

Baltimore 101,648  362,682 


Net  Overland  Movement  (including  Canada)  1,161,189 

[New  Orleans  Cotton  Exchange  Report,  1900.] 


24 


The  865,107  bales  via  St.  Louis,  and  36,695  bales  via 
Hannibal  largely  came  from  Texas,  where  rates  are  as 
high  as  $5  a bale.  The  439,000  bales  via  Cairo,  Louis- 
ville, and  Evansville  largely  came  from  Mississippi, 
where  the  rates  are  from  $4  to  $4.70  per  bale.  The 
rates  from  Memphis,  from  which  a portion  of  this  cotton 
was  shipped,  are  not  as  high  as  the  others  named,  being 
$2.77|  per  bale,  but  it  must  be  remembered  that  all  this 
cotton  from  Memphis  had  a rate  assessed  upon  it  to  get 
it  to  Memphis  of  from  $1  to  $2  per  bale. 

What  has  been  stated  in  reference  to  the  New  Eng- 
land rates  will  apply  in  a stronger  degree  to  export 
cotton  for  Great  Britain  and  the  continent.  In  view  of 
what  has  been  shown  regarding  the  home  supply  of 
cotton  of  the  Carolina  mills  and  the  rates  thereon,  it 
seems  like  a very  irrelevant  undertaking  to  set  up  the 
plea  or  argue  before  an  intelligent  tribunal  that  lower 
rates  are  necessary  for  the  Carolina  mills  to  enable  them 
to  compete  with  the  English  or  continental  mills.  The 
foreign  mills  have  to  pay  high  rates  on  the  raw  material 
to  the  ports  of  trans-shipment  plus  an  ocean  rate  for 
four  thousand  miles,  plus  an  inland  rate  in  the  foreign 
country  that  we  know  is  much  higher  than  any  rate  in 
the  United  States  for  a corresponding  distance,  a further 
high  inland  rate  on  the  product  plus  the  ocean  rate  to 
destination,  as  against  the  “no  rates”  of  the  Carolina 
mills  on  a large  proportion  of  their  cotton,  and  low 
rates  on  the  remainder,  plus  rates  on  the  product  which 
we  are  sure  must  be  as  reasonable  as  are  those  of  the 
foreign  mills. 

But,  even  though  the  Carolina  mills  labored  under  a 
disadvantage  by  reason  of  more  favorable  rates  on  ocean 
carriage  and  inland  transportation  of  other  countries  on 
the  export  raw  cotton  and  product  thereof,  would  it  be 
a proper  office  for  the  Southern  Railway  to  undertake  to 
equalize  these  disadvantages  by  destroying  the  rate 
fabric  of  long  years’  standing  in  territory  700  miles  away 
from  its  mills,  thereby  depleting  the  revenues  of  other 


25 


* 

lines  to  a far  greater  degree  than  it  might  hope  to  gain 
by  the  destruction.  But,  that  the  fears  entertained  by 
the  Southern  Railway  traffic  officials  as  to  the  ability  of 
the  Carolina  mills  to  compete  in  the  markets  of  the 
world  with  other  consuming  districts  have  no  founda- 
tion in  fact,  can  be  readily  demonstrated.  A glance  at 
the  record  of  the  development  of  the  Carolina  mills  will 
suffice  to  allay  all  apprehensions  on  this  score.  The  fol- 
lowing statement  shows  the  spindles  in  operation  in  the 
States  of  North  Carolina,  South  Carolina,  and  Georgia 
for  the  past  four  years  : 

SPINDLES  IN  OPERATION. 


STATE.  1897.  1898.  1899.  1900. 

North  Carolina  ..  969,337  1,018,303  1,283,638  1,581,787 
South  Carolina  ..1,250,324  1,307,566  1,626,370  2,119,995 
Georgia 704,753  765,142  926,044  1,186,71 6 


2,924,414  4,888,498 

2,924,414 


Increase  in  four  years 1,964,084 

Percentage  of  increase 67$ 


[New  Orleans  Cotton  Exchange  Keport,  made  up  from  actual  figures  from  the  mills 
for  year  ended  August  31,  1900.] 

The  figures  show  a steady  and  large  growth  each  year 
greater  than  any  cotton  industry  in  the  world,  the  in- 
crease in  the  four  years  being  1,964,084  spindles,  or  67 
per  cent. 

It  may  be  well  to  remark  here  that  the  New  England 
mills,  in  five  years,  increased  only  250,000  spindles,  or 
1.8  j>er  cent;  Great  Britain  only  2.4  per  cent.  There  were 
built  in  North  Carolina  during  the  past  year  thirty-four 
new  cotton  mills,  in  South  Carolina  thirty-one,  and  in 
Georgia  thirty-seven,  and  the  number  of  spindles  in  these 
States  increased  the  past  year  1,052,446,  which  was  nearly 
as  much  as  the  total  increase  of  Great  Britain  in  five 
years,  and  more  than  four  times  the  increase  in  the  New 
England  States  for  five  years.  Does  it  seem  reasonable 


26 


that  fresh  capital  would  be  invested  in  these  new  mills  if 
the  rates  charged  on  cotton  were  unfavorable  ? How, 
then,  can  we  treat  with  seriousness  Mr.  Finley’s  asser- 
tion that  ‘ ‘ there  is  a feeling  of  deep  concern  about  the 
present  situation,  and  they  (the  Carolina  mill  owners) 
look  confidently  to  the  roads  to  relieve  them  % ” 


The  bases  for  these  low  cotton  rates  to  the  Carolinas 
enforced  by  the  Southern  Hailway  were  given  by  Mr. 
Culp,  its  traffic  manager,  at  a meeting  in  St.  Louis  Octo- 
ber 4th,  as  follows : 

“We  did  take  Atlanta  as  a basis.  The  rate  (from 
Atlanta)  to  South  Atlantic  ports  was  43  cents.  The  rate 
from  Atlanta  to  Wilmington  was  43  cents.  The  mills  in 
North  Carolina — most  of  the  important  mills — are  inter- 
mediate between  Atlanta  and  Wilmington.  Some  of 
them  in  South  Carolina  are  intermediate  between 
Atlanta  and  Charleston.  The  rate  from  Atlanta  to 
Carolina  mills  had  been  49  cents — not  all,  but  most  of 
them.  Spartanburg  would  have  been  as  low  as  38  cents. 
Some  others,  I think,  had  been  40  cents.  We,  of  course, 
gave  due  consideration  to  the  rate  on  cotton  to  these 
mills  and  the  rate  on  the  cotton  factory  products  out  to 
the  eastern  points  to  which  they  would  be  shipped. 
Taking  these  two,  it  was  apparent  that  they  were  at  a very 
great  disadvantage  as  compared  with  the  eastern  mills; 
that  the  eastern  mills  could  ship  their  cotton  to  their 
mills,  manufacture  it  and  ship  it  back  to  New  York — 
the  principal  market,  and  the  market  rates  to  which  are 
always,  or  nearly  always,  considered  in  making  sales  for 
export.  It  was  very  apparent  to  us  that  if  we  charged 
even  43  cents  from  Atlanta  to  the  North  Carolina  mills, 
the  same  as  to  Wilmington,  we  were  charging  all  that 
we  ought  to  charge.  We  might  very  properly  have 
figured  out,  if  we  had  attempted  to  equalize — to  put 
them  on  a parity  with  the  eastern  mills — that  they 
ought  to  have  had  a lower  basis  than  that ; but  we  said 
that  we  would  try  this  rate.  Now,  the  rates  on  cotton 
factory  products  from  South  Carolina  to  the  East  are 
considerably  higher  than  they  are  from  North  Carolina 
— more  than  5 cents  higher ; in  some  cases  considerably 


27 


more  than  5 cents.  We  therefore  suggested  43  cents 
from  Atlanta  to  the  North  Carolina  mill§,  and  we  made 
the  South  Carolina  mills  5 cents  less.  That  gave  us  a 
starting  point.  Now,  the  rates  from  Birmingham  and 
Montgomery  and  Selma  and  Meridian  and  Chattanooga 
and  Borne  and  Dalton  and  all  points  between  Chatta- 
nooga and  Atlanta,  and  all  points  between  Chattanooga 
and  Birmingham  and  Chattanooga  and  Selma  to  the 
East  and  to  the  South  Atlantic  ports  are  now  and  have 
been  for  a good  many  years  2 cents  per  100  pounds 
higher  than  from  Atlanta.  It  was,  therefore,  a proper 
basis  to  make  the  rates  from  these  same  points  to 
Carolina  mills  2 cents  higher  than  from  Atlanta  to  the 
Carolina  mills.  That  brings  us  down  to  points  west  of 
Birmingham.  We  found  there  was  a difference  of  16 
cents  per  100  pounds  existing  between  the  rates  from 
Birmingham  to  Carolina  mills  and  from  Mississippi 
points  (Columbus  and  West  Point)  to  Carolina  mills. 
That  is  perhaps  the  difference,  or  about  the  difference, 
between  the  rates  from  those  points  and  the  rate  from 
Birmingham  to  eastern  cities.  Whether  that  difference 
is  too  high  or  not,  I am  not  going  to  say.  The  rates 
from  Mississippi  to  the  East,  as  I have  before  stated, 
had  been  fixed  largely  via  Cairo  or  via  the  Gulf.  The 
Bichmond  & Danville,  and  later  the  Southern  Bailway, 
have  never  pressed  very  much  for  reductions  from  those 
rates  to  eastern  cities.  They  have  adopted  the  rates 
which  were  fixed  from  time  to  time  through  Cairo  or 
through  the  Gulf  ports.  There  may  now  and  then  have 
been  some  rate  changed  a little,  but  I don’t  even  recall 
that.  They  have  adopted  and  continued  and  worked  the 
basis  fixed  by  the  Southern  lines  to  northern  and  eastern 
cities,  and  suggested  no  change ; but  when  they  came  to 
fix  rates  from  those  points  to  points  on  our  own  line  east 
of  Atlanta,  from  160  up  to  200  or  300  miles,  it  was  clear 
that  those  rates  could  not  be  defended.  They  could  not 
be  defended  before  any  set  of  railroad  men,  traffic  men, 
who  had  no  interest  in  the  business  at  all  and  who 
looked  at  what  was  fair  and  right.  They  could  not  have 
been  defended  before  any  Interstate  Commerce  Commis- 
sion. They  could  not  have  been  defended  before  any 
court.  The  question  with  us  was  what  differential  we 
should  fix  as  between  Columbus  and  West  Point  and 
Birmingham.  We  had  there  a 2-cent  differential  be- 
tween Birmingham  and  Atlanta,  a distance  of  167  miles. 


28 


The  distance  from  Columbus  to  Birmingham  is  123 
miles.  At  the  lirst  idea,  it  might  have  seemed  that  a 
2-cent  differential  over  Birmingham  would  have  been  a 
proper  differential  to  make  to  these  Carolina  mills,  but 
there  was  Meridian  a little  farther  away  from  Birming- 
ham than  Columbus,  with  a 6-cent  differential,  and  I 
reasoned  that,  ‘Well,  we  will  let  Meridian  stand;  we 
won’t  change  that  rate,  and  we  will  make  Columbus  as 
high,  although  the  distance  is  less  and  although  it 
makes  the  difference  6 cents  per  100  pounds  between 
Birmingham  and  Columbus,  whereas  the  difference  be- 
tween Birmingham  and  Atlanta  is  2 cents.’  Now,  I 
submit  that  not  one  of  you  gentlemen,  if  you  had  been 
figuring  rates  on  your  own  road,  would  have  done  more 
than  that. 

•‘Montgomery  and  Selma  are  based  2 cents  higher  than 
Atlanta;  have  been  for  a great  many  years.  The  competi- 
tion via  the  Alabama  River  through  the  Gulf  has  seemed 
to  prevent  a higher  rate  than  that.  No  doubt,  as  every 
one  who  participates  in  business  from  Montgomery 
knows,  many  seasons  the  bulk  of  the  business  which 
goes  out  via  the  Gulf  does  not  pay  anything  like  45 
cents  per  100  pounds  to  New  Orleans,  or  35  cents  to 
Mobile  and  Pensacola.  They  don’t  get  even  those  rates. 
Likewise,  the  bulk  of  the  business  which  goes  out  from 
Montgomery  does  not  pay  45  cents  to  South  Atlantic 
ports.  Those  rates  are  cut  in  two  sometimes,  and  there 
is  always  a very  marked  shrinkage  in  them.  They  are 
simply  paper  rates  when  it  comes  to  the  movement  of 
the  business  which  does  not  go  to  South  Atlantic  ports 
proper,  but  goes  beyond.  But  we  took  this  paper  rate  to 
the  South  Atlantic  ports  and  to  Wilmington,  although 
the  business  does  not  move  at  it.  and  we  used  that  as  a 
basis  for  our  rates  to  Carolina.  Now  Birmingham  being 
nearer  Atlanta  and  the  South  Atlantic  ports  than  Mont- 
gomery or  Selma,  has  always  taken  the  same  rates  to 
Atlantic  ports  as  Montgomery  and  Selma  for  so  many 
years  that  I doubt  if  it  w’ould  be  practical,  or  even  wise 
or  expedient,  to  undertake  to  put  that  rate  up,  but  that 
was  the  rate,  and  that  is  the  rate  as  we  took  it.  Now, 
when  we  went  west  of  Columbus,  cotton  was  carried  last 
year — we  had  plenty  of  information  to  show  that  cotton 
was  carried  last  year  from  Vicksburg  to  Carolina  mills 
as  low  as  55  cents  per  100  pounds.  It  did  not  pass  over 
the  Southern  Railway.  I think  the  rate  from  New 


29 


Orleans  was  55  cents.  We  had  a rate  of  51  cents  from 
Columbus  and  West  Point,  and  it  looked  like  (55  cents 
being  the  rate  from  Vicksburg  and  55  cents  from  New 
Orleans)  a 4-cent  differential,  making  the  rate  55  cents, 
was  not  unreasonable  in  fixing  the  rate  from  Winona, 
Greenville,  and  other  points.” 

[Report  of  meeting  at  St.  Louis,  October  4,  1900.] 


And  again,  in  a letter  to  the  Illinois  Central  Company, 
he  says  : 

“A  further  justification  for  establishing  a rate  of  51 
cents  from  Columbus,  Miss.,  is  found  in  the  rate  from 
Meridian  to  mills  in  North  Carolina.  This  rate  has  been 
for  years,  with  one  temporary  exception,  51  cents  per 
100  pounds,  and  it  is  not  inconsistent  to  make  the  rate 
from  Columbus  and  West  Point  the  same  as  from 
Meridian,  the  distance  from  Columbus  being  less  than 
from  Meridian  to  Charlotte,  taking  Charlotte  as  a 
common  center  and  the  rates  from  West  Point  being 
usually  the  same  as  from  Columbus. 

“ In  comparing  the  rates  to  other  territory,  purchasing 
cotton  in  competition  with  the  Carolina  mills,  it  will  be 
found  that  from  Greenville  the  rates  fixed  by  water 
competition  to  New  Orleans  are  on  a ver}^  low  basis,  not 
only  to  New  Orleans  but  also  to  eastern  cities,  which  is 
likewise  true  of  Greenwood,  Miss.  ; therefore,  being 
lower  than  the  rates  from  Columbus  and  West  Point, 
Miss.,  to  New  Orleans  or  eastern  cities.  Therefore,  in 
fixing  the  rates  from  Greenville  and  Greenwood,  Miss., 
to  Carolina  territory,  4 cents  per  100  pounds  higher 
than  from  Columbus  and  West  Point,  Miss.,  it  can  not 
justly  be  said  that  the  rates  from  those  points  were 
nndulv  low  as  compared  with  the  rates  from  Columbus 
and  West  Point.  The  rates  from  Winona  and  Carolina 
mills  were  made  the  same  as  from  Greenwood.  In 
making  the  rates  from  Greenville,  Greenwood,  and 
Winona  to  Carolina  territory  higher  than  from  Columbus 
and  west  instead  of  lower,  as  is  the  case  with  respect  to 
rates  to  gulf  ports,  to  eastern  and  foreign  mills,  we  have 
made  them  4 cents  per  100  pounds  higher,  and  this 
basis  should,  and  I believe  will,  furnish  ample  protection 
to  your  local  territory.” 

We  find  here  no  consistent  principle  underlying  this 
rate  structure.  In  the  case  of  the  rates  from  Atlanta  he 


30 


is  actuated  by  the  proportions  of  through  rates  which 
accrue  to  the  line  between  Atlanta  and  South  Atlantic 
ports ; in  the  next  case  by  the  differentials  existing 
between  Birmingham  and  Atlanta  under  totally  different 
traffic  conditions  to  those  governing  the  Carolina  situation. 
In  the  rates  from  Columbus  the  differentials  which  guided 
him  in  the  Birmingham  case  are  ignored  and  he  has 
recourse  to  distance  and  the  fixed  rate  from  Meridian  for 
his  basis.  In  this  case  he  says:  “Well,  we  will  let 
Meridian  stand;  we  won’t  change  that  rate,  and  we  will 
make  Columbus  as  high,  although  the  distance  is  less.” 
Nevertheless  he  did  change  Meridian  by  reducing  the 
rate  5 cents  per  100  pounds  to  Group  2 territory, 
embracing  much  the  greater  part  of  the  Carolina  mill 
consumption.  For  the  district  west  of  Columbus,  Miss., 
168  miles  to  Greenville,  traversing  almost  the  entire 
width  of  the  State,  and  probably  the  most  important  cot- 
ton territory  in  question,  he  cites  for  his  basis  alleged 
rates  in  effect  from  Vicksburg  and  New  Orleans,  82  and 
317  miles,  respectively,  away  from  Greenville,  also  the 
rates  in  effect  to  New  Orleans  and  eastern  cities  made 
necessary  by  river  competition. 

We  here  have  a method,  or  rather  a lack  of  method, 
for  compiling  rates  which,  to  say  the  least,  is  unique. 
If  the  structure  is  not  ingenuous  it  is  certainly  very 
ingenious. 

While  we  have  no  desire  to  question  the  rates  which 
the  Southern  Railway  may  deem  proper  to  charge  from 
Atlanta  or  other  Georgia  points  to  the  Carolina  mills, 
not  being  directly  interested  in  them,  we  think  the 
principle  upon  which  they  are  constructed  and  its  espousal 
by  such  a large  and  important  railway  system  as  the 
Southern  Railway  may  be  fraught  with  many  evils  ta 
the  railroad  body  politic.  As  a part  of  this  body  politic, 
we  take  exception  to  it  as  being  a pernicious  attack  upon 
all  local  rate  structures  which  railroads  have  to  depend 
upon  for  their  main  revenues. 

The  recognition  and  practice  of  a principle  that  local 


31 


rates  to  towns  or  industries  should  be  measured  by  the 
proportions  which  accrue  to  a line  for  like  or  other 
distances  on  a through  shipment  destined  1,000  or 
4,000  miles  beyond,  as  in  this  case,  would  be  subversive 
of  the  most  vital  interests  of  railroads.  It  could  not  be 
sanctioned  without  grave  consequences,  even  though 
the  shipment  were  destined  only  100  miles  beyond  the 
local  point ; therefore,  the  less  could  it  be  sanctioned 
when  with  its  additional  rate  assessment  the  shipment 
is  destined  to  New  England,  1,000  miles  away,  or  to 
Europe,  4,000  miles  away.  If  there  is  one  traffic  principle 
more  than  another  that  railroad  managers  have  striven  to 
inculcate  in  the  minds  of  shippers,  courts,  communities, 
and  commissions,  it  is  that  a division  of  a through  rate 
which  a road  receives  between  given  points  should  never 
be  considered  the  measure  of  the  local  rate  between  such 
points.  Of  course,  there  are  many  good  reasons  for  this 
which  have  been,  and  can  be,  advanced.  The  Interstate 
Commission  has  in  its  decisions  many  times  sanctioned 
this  principle,  that  through  rates  are  not  illegal  which, 
when  divided,  give  carriers  less  than  their  local  rates  ; 
and  in  a recent  case,  Edward  Kemble  vs.  Boston  & 
Albany  Railroad,  it  declared  that  “it  is  not,  as  a matter 
of  law,  a violation  of  the  act  to  regulate  commerce  to 
make  a lower  rate  to  the  port  of  export  upon  traffic 
which  is  exported  than  upon  that  which  is  locally  con- 
sumed, for  the  export  rate  is  in  essence  the  division 
of  a through  rate.” 

In  the  case  of  the  rates  from  Birmingham  enforced  by 
the  Southern  Railway  we  find,  in  essence,  the  same  per- 
nicious principle  underlying  them  as  that  which  governed 
the  Atlanta  rates.  Because,  through  the  many  variable 
conditions  and  circumstances  affecting  the  rate  situation 
of  Birmingham  in  the  past  it  was  found  necessary  to  so  ad- 
just and  readjust  at  the  incoming  of  new  roads  the  rates 
to  New  England  and  to  South  Atlantic  ports,  on  cotton 
for  foreign  countries,  that  a difference  of  only  2 cents 
per  100  pounds  existed  between  them  and  the  rates  from 


32 


Atlanta,  it  is  now  claimed  by  the  Southern  Railway  that 
this  is  a proper  difference  to  apply  between  Atlanta  and 
Birmingham  on  cotton  for  consumption  by  the  Carolina 
mills.  We  can  well  understand  that  the  conflicting 
interests  of  the  railroads,  as  they  were  built  into  Birming- 
ham, one  by  one,  would  require  a readjustment  on  the 
advent  of  each  that  in  time  would  produce  this  difference, 
but  we  can  not  understand  why  this  should  be  applicable 
to  the  Carolina  mill  industry,  with  the  conditions  and 
circumstances  affecting  it  entirely  unlike  those  governing 
in  the  case  of  the  New  England  or  foreign  mills.  Mr.  Culp 
does  not  endeavor  to  explain;  he  merely  says  “it  is 
proper,”  and,  ipso  facto , down  go  the  rates  as  much  as 
55  cents  per  bale. 

To  haul  cotton,  the  staple  commodity  of  the  southern 
railroads,  upon  which  they  are  so  much  dependent  for 
their  revenue,  to  a local  industry  within  the  bounds  of 
the  southern  zone,  a distance  of  168  miles,  for  2 cents 
per  hundred  pounds,  is  not  going  to  prove  profitable. 
There  is  no  necessity  for  it,  as  has  been  shown  by  the 
rapid  and  successful  growth  of  the  Carolina  mill  industry. 
There  is  no  such  competition  with  northern  or  European 
mills  as  is  claimed  by  the  Southern  Railway,  and  never 
can  be  so  long  as  these  Carolina  mills  get  the  greater  part 
of  their  cotton,  as  is  the  case  now,  at  nominal  rates  of 
$1  per  bale,  or  free  of  any  rates  when  hauled  to  the 
mills  in  wagons  from  the  immediate  country. 

The  average  distance  from  Atlanta  to  the  mill  points 
in  Group  No.  1 territory  is  reported  to  be  358  miles,  and 
to  Group  No.  2 territory,  222  miles.  The  difference 
between  these  is  136  miles,  making  that  the  average  dis- 
tance between  the  mills  in  the  two  groups.  Now,  it  will 
be  observed  that  the  Southern  Railway  charges  5 cents 
per  100  pounds  less  on  cotton  to  one  of  these  groups  than 
to  the  other.  If  it  is  proper  to  have  a difference  of  5 
cents  per  100  pounds  to  points  of  destination,  where  the 
difference  in  distance  will  average  136  miles,  is  it  not 
equally  proper  that  at  least  a corresponding  or  propor- 


33 


tionate  difference  should  mark  the  rates  from  points  of 
origin  where  there  is  a difference  in  distance  of  168  miles? 

Farther  west  we  come  to  Columbus  and  West  Point, 
Mississippi.  Aberdeen,  Starkville,  and  West  Point, 
towns  of  importance,  are  near  Columbus,  and  as  they 
largely  derive  their  trade  from  the  same  territory,  they 
necessarily  have  like  rates.  In  adjusting  the  rates  from 
these  stations  to  the  Carolina  mills,  Mr.  Culp  says  he 
found  the  rate  from  Meridian  51  cents,  and  though  he 
thought  2 cents  over  Birmingham  would  be  proper  to 
make  from  Columbus,  on  account  of  the  distance,  123 
miles,  he  would  not  change  Meridian  but  would  make 
Columbus  and  West  Point  the  same.  The  former  rate  of 
51  cents  applied  to  the  whole  of  the  Carolina  territory, 
whereas  under  the  new  adjustment,  the  rate  applied  only 
to  Group  1,  and  was  reduced  25  cents  per  bale  to  Group 
2,  in  which  are  comprised  the  mills  consuming  the  larger 
share  of  the  cotton.  The  reductions  from  Columbus  and 
group  stations  to  Group  2 of  the  Carolina  mills  are  as 
much  as  $1.10  per  bale. 

It  will  be  noted  that  the  rule  which  governed  in 
making  the  rates  from  Birmingham  to  the  Carolina 
mills  — that  of  making  them  so  much  higher  than 
Atlanta  as  the  rates  from  Birmingham  to  New  England 
and  South  Atlantic  ports  where  higher  than  Atlanta  — 
was  not  observed  here.  If  it  were,  instead  of  the  rate 
being  36  cents  on  compressed  cotton  from  this  group  of 
stations  to  the  Carolina  mills,  it  would  be  49  cents. 
Even  then  it  would  be  too  low  as  compared  with  other 
rates  and  conditions. 

The  rate  from  Meridian  to  New  Orleans,  196  miles,  is 
36  cents  per  100  pounds  on  compressed  cotton.  The  rate 
to  Boston,  made  by  the  Southern  Railway  to  meet  this 
New  Orleans  competition,  is  61  cents.  The  rate  to  Char- 
lotte, 589  miles,  made  by  the  Southern  Railway  to  meet 
the  Gulf  and  Boston  competition,  was  41  cents.  It  now 
reduces  the  rate  to  Group  2 of  the  Carolinas  to  36  cents, 
making  it  the  same  for  three  times  the  distance  as  the 
Gulf  rate.  This,  on  its  face,  is  considerably  out  of  line. 


34 


Having  established  these  reduced  rates  from  Meridian 
which  can  not  be  justified  by  competition  with  either  the 
rates  to  the  Gulf  or  New  England,  it  applies  the  same 
rates  to  Columbus  and  West  Point,  notwithstanding  the 
rates  from  those  stations  were  13  cents  per  100  pounds 
more  to  Boston  and  11  cents  more  to  New  Orleans  than 
were  the  Meridian  rates.  If  the  Meridian  rates  to  the 
Carolinas  were  originally  based  on  the  rates  to  the  Gulf 
and  to  Boston,  and  the  West  Point  group  stations  were 
higher  than  these  latter,  why  should  not  the  Carolina 
rates  from  West  Point  be  made  higher  accordingly? 
These  rates  from  West  Point  were,  to  New  Orleans,  a 
distance  of  294  miles,  on  compressed  cotton,  47  cents;  to 
Boston,  1,391  miles,  74  cents,  of  which  the  Southern  lines, 
for  a haul  of  259  miles,  received  37  cents.  The  rate  to 
Charlotte,  577  miles,  on  the  reduced  basis,  is  36  cents. 
It  will  be  here  seen  that  the  Southern  Bailway,  for  its 
Carolina  mills,  had  8 cents  and  13  cents  margin  to  work 
on  at  Meridian,  as  against  the  Boston  rate.  As  these 
rates  were  made  by  the  Southern  Bailway  it  is  assumed 
they  were  relatively  fair.  If  they  were,  how  can  a dif- 
ference of  33  and  38  cents  in  favor  of  the  Carolinas  be 
justified  at  West  Point?  If  the  Meridian  rates  are  fair 
to  the  Southern  Bailway,  the  West  Point  rates  must  be 
very  unfair,  and  in  time  as  the  Carolina  mills  wax 
stronger,  they  will  work  sad  havoc  to  the  other  lines’ 
revenues. 

For  the  150  miles  west  of  West  Point,  via  Winona, 
Greenwood,  Morehead,  and  Elizabeth,  to  Greenville,  the 
Southern  Bailway  has  also  established  an  unjustifiably 
low  basis  to  its  Carolina  mills,  the  reductions  being  from 
Winona  and  Greenwood,  90  cents  per  bale,  to  Group  2, 
and  $1.05  per  bale  from  the  other  stations.  As  the 
Southern  line  parallels  the  Illinois  Central  for  a distance 
of  135  miles  in  this  territory,  it  means  that  all  local  sta- 
tions, as  well  as  the  junctions,  will  be  affected. 

The  first  reason  assigned  by  the  Southern  Bailway  for 
this  low  basis  from  Winona  and  Greenville  is  that  cotton 


35 


was  carried  l#st  year  from  Vicksburg  and  New  Orleans 
to  the  Carolina  mills  as  low  as  55  cents  per  100  pounds. 
We  had  no  information  of  this  character,  although  we 
were  in  a position  to  know  something  about  it  if  such 
had  been  the  case.  Since  this  statement  was  made  we 
inquired  into  the  matter,  but  were  unable  to  get  it  veri- 
fied. The  facts  are  that  the  rates  from  Vicksburg  and 
New  Orleans  all  of  last  season  were  71  cents  per  100 
pounds.  Mr.  Culp  should  remember,  however,  before 
basing  any  rates  on  those  from  Vicksburg  or  New  Or- 
leans that  the  cotton  on  entering  those  places  has  been 
already  assessed  a rate  of  from  $1.00  to  $2.75  per  bale, 
and  this  should  have  cognizance  when  considering  the 
relation  of  other  rates  to  those  from  New  Orleans  or 
Vicksburg. 

In  further  reference  to  Greenville,  Mr.  Culp  says  that 
the  rates  fixed  by  water  competition  to  New  Orleans  and 
Eastern  cities  are  on  a very  low  basis,  which  is  likewise 
true  of  Greenwood.  He  then  states  that  as  they  are 
lower  to  New  Orleans  and  Eastern  cities  than  the  rates 
from  West  Point,  by  making  them  4 cents  to  the  Caro- 
linas  higher  than  West  Point,  they  can  not  be  considered 
unduly  low. 

Our  rates  from  Greenville  and  Greenwood  are  lower 
than  desired  by  us,  but  stress  of  water  competition  ren- 
ders us  powerless  to  advance  them.  From  Greenville 
they  are  55  cents,  compressed,  to  Boston,  and  21  cents  to 
New  Orleans  ; from  Greenwood,  64  cents  to  Boston,  and 
33  cents  to  New  Orleans.  To  Charlotte,  via  the  Southern 
Railway,  727  miles  from  Greenville,  the  rate  is  40  cents. 
Now,  low  as  the  rate  is  from  Greenville  to  New  Orleans, 
made  necessary  by  river  competition — and  it  should  be 
remembered  it  is  only  a proportion  of  a through  export 
rate — yet  it  is  higher  per  mile  than  is  that  of  the  Southern 
Railway,  which  is  a strictly  local  rate.  The  Southern 
Railway  rate  should  be  48  cents  instead  of  40,  to  be  on  a 
parity,  on  a mileage  basis,  with  the  New  Orleans  rate. 
Our  proportion  to  Cairo,  20  cents  per  100  pounds  of  the 


86 


Boston  through  rate  from  Greenville,  is  also  higher,  pro- 
portionately, per  mile  than  is  the  strictly  local  rate  of 
the  Southern  Railway  to  Charlotte.  To  be  on  a parity, 
the  Charlotte  rate  should  be  47  cents  instead  of  40  cents. 
To  be  on  a parity,  on  a mileage  basis,  with  the  Illinois 
Central’s  low  export  rate  from  Greenwood  to  New 
Orleans,  made  necessary  by  water  competition,  the  South- 
ern Railway’s  rate  would  have  to  be  79  cents  per  100 
pounds  instead  of  40  cents.  As  these  Illinois  Central 
rates,  with  the  possible  exception  of  those  from  Memphis, 
are  lower  as  related  to  distance  than  any  others  on  the 
line,  it  will  be  readily  observed  how  radical  and  how 
sweeping  are  the  reductions  made  by  the  Southern 
Railway. 

These  same  low  rates  of  the  Southern  Railway  from 
Greenville  are  carried  to  Winona,  eighty-seven  miles  east, 
where  it  can  not  be  said  that  low  rates  either  to  the  Gulf  or 
to  Boston  make  them  necessary.  Neither  does  the  long 
and  short  haul  clause  of  the  Act  to  Regulate  Commerce 
make  them  necessary,  inasmuch  as  the  river  competition 
at  Greenville  justifies  the  Southern  Railway  in  charging 
less  from  that  place  than  from  the  inland  town  of  Winona. 
This  has  been  its  practice  in  the  past,  and  is  now  on  cot- 
ton to  the  Gulf  and  to  Eastern  cities.  It  is  not  its  prac- 
tice, however,  on  cotton  for  the  Carolinas ; Winona,  an 
interior  town  in  the  heart  of  the  Mississippi  cotton  dis- 
trict has  been  doomed  to  take  the  same  low  rates  to  the 
Carolinas  as  are  alleged  to  be  necessary  to  charge  from 
Greenville  where  water  congelation  is  active.  The  Illinois 
Central’s  rates  prior  to  the  recent  reduction  were  from 
Winona,  on  compressed  cotton,  45  cents  per  100  pounds, 
to  New  Orleans,  272  miles,  and  76  cents  to  Boston,  1,458 
miles.  It  may  be  well  to  mention  that  we  formerly  car- 
ried higher  rates  to  Boston  than  these,  but  they  were 
reduced  by  the  Southern  Railway’s  predecessor  on  the 
completion  of  that  line  to  the  river. 


37 


Mr.  Finley  says  “the  basis  upon  which  we  should 
give  the  most  consideration  to  the  question,  is  the  basis 
of  rates  to  Carolina  mills  compared  with  those  to  New 
England  mills  and  for  export.” 

It  is  reasonable  to  assume,  then,  that  in  laying  the 
foundation  for  his  rate  structure  at  Atlanta,  where  he 
made  large  reductions  to  the  Carolinas,  thus  increasing 
the  difference  between  them  and  Boston  and  export 
rates,  this  important  phase  of  the  matter  had  deserved 
consideration.  There  is  no  good  reason,  of  course,  why 
the  principle,  if  a good  one,  should  not  apply  in  the 
Carolinas  and  in  Georgia,  as  well  as  in  Alabama  or 
Mississippi.  From  Atlanta  we  find  that  by  his  adjust- 
ment of  43  and  38  cents  to  the  respective  groups  1 
and  2 of  the  Carolinas,  he  enjoyed  a differential  for 
his  mills  under  Boston  of  20  and  25  cents,  and  to  South 
Atlantic  ports,  5 cents  to  Group  2 territory.  When  we 
come  to  Birmingham  we  find  that  the  adjustment  from 
there  makes  the  same  difference  in  rates  between  the 
Carolina  mills,  on  the  one  hand,  and  Boston  and  South 
Atlantic  ports  on  the  other,  as  at  Atlanta.  At  Meridian 
the  difference,  in  favor  of  the  Carolina  mills  as  against 
Boston,  is  25  and  20  cents;  it  is  17  and  12  cents  as 
against  South  Atlantic  ports,  and  8 and  3 cents  as 
against  New  Orleans.  At  Columbus  and  group  stations, 
the  difference  in  favor  of  the  Carolina  mills  as  against  Bos- 
ton is  38  and  33  cents,  and  against  New  Orleans  11  and 
6 cents.  At  Winona,  the  difference  in  favor  of  the 
Carolina  mills  as  against  Boston  is  36  and  31  cents. 

Now,  if  he  can  control  cotton  <for  the  Carolinas  as 
against  Boston  or  Europe  at  the  difference  in  rates 
established  for  the  Atlanta,  Birmingham,  and  Meridian 
territories,  why  is  it  necessary  for  him  to  make  greater 
differences  at  Columbus,  West  Point  and  Winona?  If 
cotton  can  be  controlled  for  the  Carolina  mills  in  one 
territory  as  against  Boston  or  export  at  a given  differ- 
ence in  the  rates,  why  can  it  not  be  controlled  at  another 
having  like  differences?  If  this  logic  is  sound,  does  it 


38 


not  look  as  if  the  Southern  Railway  was  wasting 
revenue  that  otherwise  could  be  retained?  The  most 
serious  feature  of  it,  however,  is  that  it  forces  upon 
other  lines  a reduction  of  rates,  the  necessity  or  justice 
of  which  can  not  be  explained,  but  which  results  in  large 
losses  of  revenue. 

Mr.  Finley  states  in  a letter  to  Mr.  Van  den  Berg, 
vice-president  of  the  Louisville  & Nashville  Railroad, 
that  from  a number  of  mills  in  North  Carolina  the  rate 
on  cotton  factory  products  to  New  York  is  7 cents  lower 
than  the  rate  from  mills  in  the  Piedmont  section,  and 
“ from  Burlington,  Raleigh,  and  points  in  contiguous 
territory,  in  the  State  of  North  Carolina,  the  rate  to 
New  York  is  41  cents  per  100  pounds,  or  12  cents  less 
than  the  rates  from  the  Piedmont  section  of  South 
Carolina.” 

From  Piedmont  to  Burlington,  N.  C.,  the  distance  is 
233  miles,  and  we  here  have  a differential  of  as  much  as 
12  cents  per  100  pounds  on  the  product  of  the  mills 
between  the  two  points.  If  it  is  fair  to  allow  12  cents 
differential  on  the  product  for  233  miles,  is  it  not  equally 
fair  that  a proportionate  differential  should  be  allowed 
on  the  raw  cotton  between  Atlanta  and  Birmingham, 
168  miles  ? The  object  of  the  reduced  rates,  as  stated  by 
the  Southern  Railway,  is  to  put  the  Carolina  mills  more 
on  a parity  with  New  England  and  foreign  mills.  To 
accomplish  this,  why  should  not  such  large  differences 
in  the  rates  on  the  product  as  are  here  shown  be  reduced 
instead  of  the  rates  on  the  raw  material  ? If  it  is  proper 
that  Piedmont,  233  miles  farther  west  than  Burlington, 
should  have  12  cents  per  100  pounds  higher  rate  on 
products,  then  we  can  see  no  good  reason  why  Birming- 
ham, 168  miles  west  of  Atlanta,  should  not  have  a 
proportionate  difference  higher  than  Atlanta,  or  8.6 
cents  per  100  pounds  instead  of  2 cents  as  fixed  by  the 
Southern  Railway. 

In  his  telegram  to  Mr.  Russell,  president  of  the  Mobile 
& Ohio  Railroad,  Mr.  Finley  says : 


39 


“ You  must  certainly  overlook  the  fact  that  Carolinas 
in  taking  this  raw  cotton  on  rates  under  discussion  have 
also  to  pay  rates  connected  with  long  hauls  on  their 
cotton  factory  products  in  reaching  Eastern  markets. 
This  combination  being,  even  on  basis  reduced  rates, 
materially  in  excess  of  rate  direct  to  Eastern  mills.” 

We  ask  if  this  equalization  is  necessary  or  desired, 
why  not  attain  it  by  making  the  rates  on  the  products 
to  the  common  market  commensurate  with  those  made 
by  the  New  England  mills?  We  are  told  by  the 
Southern  Railway  officials  that  the  rate  on  the  products 
from  New  England  mills  to  New  York,  the  common 
market  for  all  mill  products,  is  10  cents  per  100  pounds, 
while  the  rate  from  the  Carolina  mills  is  as  high  as  53 
cents  per  100  pounds,  and  the  inference  is  from  state- 
ments made  and  action  taken  that  this  difference  must 
be  equalized  by  reductions  in  the  raw  cotton  rates. 
Never  a word  have  we  heard  with  reference  to  reduc- 
tions on  the  product. 

Even  though  this  principle  of  equalization  sought  to 
be  established  by  the  Southern  Railway  were  recognized 
by  the  other  lines,  why  should  not  the  products  of  the 
Carolina  mills  take  rates  to  New  York,  the  common 
market  for  all  mill  products,  proportionate  with  those 
from  competing  centers  in  New  England,  at  the  same 
distance-ratio-rate  as  the  rates  on  the  raw  cotton  to 
the  Carolina  mills  are  proportionate  with  the  rates  of 
other  lines  to  their  marts  of  trade  ? Is  it  fair  that  the 
raw  cotton  alone  should  stand  the  entire  brunt  of  the 
equalization  ? 

As  before  stated,  the  average  distance  from  Atlanta 
to  the  Carolina  mills  Group  No.  1 is  358  miles  and  to 
Group  No.  2,  222  miles.  The  difference  between  these  is 
136  miles,  so  that  the  average  distance  from  Atlanta  to 
all  Carolina  mills  is  one-half  of  136  plus  222,  or  290  miles. 
The  distance  from  Atlanta  to  New  York  is  868  miles. 
Deducting  from  this  the  average  distance  from  Atlanta 
to  all  the  Carolina  mills,  290  miles,  gives  us  588  miles  as 


40 


the  average  distance  from  all  the  Carolina  mills  to  New 
York. 

Mr.  Finley  says  in  his  letter  to  Mr.  Van  den  Berg,, 
“the  rate  on  cotton  factory  products  of  South  Carolina 
mills  to  New  York  is  53  cents  per  100  pounds.  The  rate 
on  cotton  factory  products  from  the  important  mills  in 
North  Carolina  to  New  York  will  average  about  46  cents.” 
An  average,  therefore,  of  49J  cents  from  all  mills  in  thfr 
Carolinas  will  probably  be  not  much  out  of  the  way.  We 
then  have  an  average  rate  of  49f  cents  on  the  products  of 
the  Carolina  mills  to  New  York  for  a distance  of  588  miles 
as  against  a rate  of  10  cents,  as  stated  by  Mr.  Culp,  from 
New  England,  where  the  average  distance  will,  in  all 
probability,  be  240  miles.  The  average  distance  from 
Lewiston,  Merrimac,  Boston,  Lowell,  Providence  and 
Fall  River  to  New  York  is  242  miles.  Lest  Mr.  Culp 
should  be  in  error  as  to  the  rates  on  the  product  from 
the  New  England  mills  being  10  cents  per  100  pounds,, 
though  he  has  used  this  figure  repeatedly  in  his  state- 
ments and  comparisons,  we  will,  for  the  purpose  now  on 
hand,  double  it  and  make  it  20  cents,  which  will  be  so 
much  in  favor  of  his  side  of  this  particular  point  we 
wish  to  elucidate. 

Now,  if,  for  the  purpose  of  putting  the  Carolina  mills 
on  an  equality  with  the  New  England  mills  on  the  com- 
bined  rates  on  the  raw  cotton  and  the  product  thereof, 
the  Southern  Railway  charges  36  cents  per  100  pounds 
on  raw  cotton  from  West  Point  to  Charlotte,  a distance 
of  577  miles,  as  against  a rate  of  47  cents  charged  by  the 
Illinois  Central  Company  to  New  Orleans,  a distance  of 
294  miles,  what  rate  should  it,  the  Southern,  charge  on 
the  product  from  the  Carolina  mills  to  New  York,  a 
distance  of  588  miles,  when  the  rates  of  the  New  England 
competitor  are  20  cents  per  100  for  a distance  of  240- 
miles?  This  is  a conversion  of  the  intricacies  of  this  rate 
problem  into  a mathematical  proposition  pure  and  simple 
the  answer  to  which  will  not  admit  of  denial. 

Is  the  answer  49£  cents,  which  the  Southern  Railway 


41 


is  now  charging?  No,  the  answer  is  19  cents,  and  if  we 
make  our  computation  based  on  10  cents  from  New  Eng- 
land to  New  York,  claimed  by  Mr.  Culp  to  be  the  general 
rate  in  effect,  the  answer  will  be  9.5  cents.  This  same 
formula  applied  to  other  points  will  show  that  the  South- 
ern Railway’s  contention  for  equalization  of  the  combined 
rates  on  cotton  and  product,  means  that  the  rates  on 
cotton  shall  be  relatively  very  low,  and  the  rates  on  prod- 
uct relatively  very  high. 

The  equities  of  the  situation  demand  that  there  shal 
be  no  more  inequalities  at  points  of  origin  than  at  points 
of  destination,  and  that  if  any  equalization  of  the  com- 
bined rates  on  the  raw  cotton  and  product  thereof  is 
sought  for,  the  product  shall  stand  its  share  of  the  level- 
ing process  as  well  as  the  cotton.  Where  a railroad,  as 
in  the  case  of  the  Southern  Company,  controls  the  situa- 
tion, both  at  the  point  of  origin  of  the  cotton  and  the 
point  of  origin  of  the  product,  it  can  offer  no  valid  excuse 
when  contending  for  equalization  of  the  combined  rates 
to  charge  disproportionately  less  on  the  cotton  than  on 
the  product.  Equalization  of  the  combined  rates  is  the 
proposition  and  contention  of  the  Southern  Railway,  and 
if  conceded  by  the  other  lines,  it  should  be  followed  to 
its  logical  conclusion  as  above  outlined. 

We  have  had  the  repeated  assurances  of  the  Southern 
Railway  traffic  officials  that  in  adjusting  these  Carolina 
rates,  proper  regard  for  the  rights  of  others  was  ob- 
served, but  an  analysis  of  them,  as  here  shown,  does  not 
•evidence  such  assurances.  It  would  appear  that  the 
method  observed  was  to  adopt  minimum  figures  of 
differentials,  distance,  or  competition  of  markets,  which- 
ever best  served  their  purpose.  In  other  words,  the 
rates  were  formulated  as  they  were  enforced,  by  “main 
strength,”  and  are  a fitting  concomitant  to  the  assertion 
of  Mr.  Finley  in  his  letter  to  Mr.  Yan  den  Berg  that  “the 
mills  have  a right  to  demand  and  we  owe  it  to  the  mills 
that  we  shall  make  such  an  adjustment  of  rates  from 
points  outside  of  the  States  of  North  and  South  Carolina 


42 


as  will  enable  them  to  compete  with  foreign  markets  and 
with  Eastern  mills,  so  long  as  we  are  not  called  upon  in 
making  this  adjustment  to  sacrifice  the  revenues  of  our 
company .” 

What  think  you  of  that  doctrine  in  the  conduct  of 
traffic  affairs  where  the  inter-dependency  of  railroads  is 
recognized  as  being  axiomatic  \ It  is  so  much  at  variance 
with  anything  that  can  be  enforced,  without  the  entire 
destruction  of  the  railroad  properties,  that  we  do  not 
care  to  further  discuss  it. 


Both  Messrs.  Finley  and  Culp  have  stated  that  the 
rates  in  effect  to  the  Carolina  mills,  prior  to  the  recent 
reduction,  could  not  be  defended  before  courts  or  com- 
missions. Of  course,  this  is  mere  assertion,  as  it  has  not 
been  tried,  and  possibly,  like  the  other  assertions  of  these 
gentlemen  in  reference  to  the  necessity  for  the  reductions 
to  the  Carolinas,  may,  upon  examination,  be  found  not 
susceptible  of  proof. 

The  rates  and  rate  per  ton  per  mile,  prior  to  the  recent 
reductions  to  the  Carolina  mills  and  to  New  Orleans,  and 
the  proportions  of  the  Boston  rates  to  the  Ohio  River, 
wrere  as  follows : 


Proportion  of 

From  To  Carolina  Mills.  To  New  Orleans.  Boston  Rates 

to  Ohio  River. 


Distance. 

Ra'e. 

Distance. 

Rate. 

Distance. 

Rate. 

Birmingham  _ 

..458 

52i 

349 

35| 

481 

25.5 

Meridian 

..620 

51 

196 

36 

634 

31.5 

West  Point  __ 

..608 

58 

294 

47 

259 

37 

Winona.  _ _ _ 

-.675 

58 

272 

45 

276 

39 

RATE  PER  TON  PER  MILE. 


Proportion  of 

From  To  Carolina  Mills.  To  New  Orleans.  Boston  Rates 

to  Ohio  River. 

Birmingham 2.51  cents.  2.03  cents.  1.060  cents. 

Meridian.. 1.60  “ 3.67  “ .993  mills. 

West  Point 1.90  “ 3.20  “ 2 80  cents. 

Winona 1.78  “ 3.32  “ 2.80  “ 


43 


It  will  be  seen  from  this  that  the  rates  to  the  Carolina 
mills,  as  related  to  the  distance  from  Meridian,  West 
Point,  and  Winona,  were,  on  an  average,  only  about  one- 
half  the  rates  to  New  Orleans,  and  only  76  per  cent  of 
the  rates  to  the  Ohio  River  on  Boston  shipments.  The 
difference,  it  will  be  observed,  is  more  than  enough  to 
allow  the  Southern  Railway  for  any  claim  it  might  ad- 
vance that,  on  account  of  its  longer  distance,  its  rate  per 
mile  should  be  less.  If  other  lines  can  charge  higher 
rates  to  their  markets  than  are  the  old  rates  of  the 
Southern  Railway,  we  do  not  think  it  need  be  worried 
about  justifying  them  before  courts  or  commissions. 

In  March,  1889,  soon  after  the  Interstate  Commission 
was  established,  and  when  it  was  inclined  to  be  more 
radical  with  the  railroads  on  account  of  assumed  powers, 
which  since  then  it  has  found  it  did  not  possess,  the  Illi- 
nois Central  Company  was  cited  before  it  to  answer  as  to 
the  reasonableness  of  its  cotton  rates  on  a complaint  made 
by  the  New  Orleans  Cotton  Exchange.  The  contention 
of  the  Cotton  Exchange  was  that  the  rates  to  New 
Orleans  were  unreasonable,  and  that  the  rates  should  be 
no  higher  per  mile  than  to  Boston.  These  rates  to  New 
Orleans  were  as  follows  : 


Miles. 


Rates  per  Bale 
to  New  Orleans. 


50 

100 

150 

200 

250 

300 


$1.30 

1.75 
2.25 
2.50 
2.70 

2.75 


After  an  earnest  and  vigorous  contest  on  the  part  of 
the  New  Orleans  Cotton  Exchange,  the  rates  charged 
were  decided  by  the  Commission  to  be  reasonable,  and 
were  charged  and  collected  on  the  Illinois  Central  Rail- 
road up  to  the  time  of  the  reduction  made  by  the  South- 
ern Railway. 

It  will  be  observed  that  these  rates  to  New  Orleans,  for 
300  miles,  are  as  high  as  55  cents  per  hundred,  whereas 


44 


the  rate  from  Meridian  to  the  Carolinas,  620  miles,  prior 
to  the  reduction,  was  51  cents;  from  VV  est  Point,  608  miles, 
58  cents,  and  from  Winona,  675  miles,  58  cents.  If  the 
Illinois  Central  Company,  in  1889,  established  before  the 
Commission  that  a rate  of  55  cents  per  hundred  was  rea- 
sonable for  800  miles,  and  that  this  rate  was,  in  essence, 
only  a proportion  of  the  through  export  rate,  we  do  not 
think  it  would  be  difficult  for  the  Southern  Railway  to 
establish  the  reasonableness  of  a 58-cent  rate  from 
Winona  to  a local  industry  675  miles  away. — New 
Orleans  Cotton  Exchange  vs.  Illinois  Central  Railroad 
Company,  I.  C.  C.,  Yol.  III.  (Later,  in  1894,  on  a 
complaint  of  a shipper,  we  had  occasion  to  defend  these 
same  rates  before  the  United  States  District  Court  of 
Mississippi  and  were  successful.) 


Allusion  is  made  both  by  Mr.  Finley  and  Mr.  Culp  to 
the  fact  that  the  Southern  Railway  derives  only  41  cents 
per  hundred  on  its  cotton  from  Alabama  and  Mississippi 
on  shipments  to  Boston  or  for  export  via  South  Atlantic 
ports,  and  this  is  given  as  a reason  why  it  is  justified  in 
charging  low  rates  on  cotton  from  those  States  to  the 
Carolina  mills,  inasmuch  as  by  the  addition  of  the  rate 
on  the  product  from  the  mills  more  revenue  is  realized 
than  if  the  cotton  were  taken  to  the  South  Atlantic 
ports.  On  this  subject  Mr.  Finley  says : 

“On  cotton  exported  from  Mississippi  territory  to 
foreign  ports  we  are  compelled  to  meet  through  rates 
made  on  New  Orleans.  Our  average  rate  from  Green- 
ville, Greenwood,  Winona,  West  Point,  and  Corinth  to 
Norfolk  during  the  last  season  on  export  cotton  was  41 
cents  per  100  pounds.  If,  therefore,  we  haul  to  the 
Carolina  mills  the  proportion  of  the  cotton  we  have 
heretofore  handled  to  Norfolk  for  export,  we  shall  secure, 
say,  to  North  Carolina  mills,  55  cents  per  100  pounds,  less 
the  compressing,  leaving  45  cents,  which  is  4 cents  per 
100  pounds  more  than  we  get  on  the  cotton  for  export. 
Our  average  earnings  from  Carolina  mills  to  Norfolk  on 


45 


cotton  factory  products  is  about  30  cents  per  100  pounds, 
so  that  on  cotton  drawn  from  points  in  Mississippi  west 
of  West  Point  and  Columbus  to  Carolina  mills,  and 
reshipped  in  the  shape  of  manufactured  product,  we 
would  earn  approximately  75  cents  per  100  pounds,  as 
against  41  cents,  our  earnings  on  cotton  exported 
through  Atlantic  ports.  On  cotton  from  Columbus, 
Miss.,  shipped  to  Carolina  mills,  manufactured  and  re- 
shipped,  we  would  earn  approximately  70  cents  per  100 
pounds,  as  against  about  53  cents  per  100  pounds  on 
cotton  from  Columbus  to  Boston.  Similar  comparisons 
can  be  made  with  respect  to  cotton  from  points  in 
Alabama.”* 

Mr.  Finley  here  endeavors  to  show  that  because 
geographically  his  line  is  disadvantageous^  located, 
with  respect  to  hauling  cotton  to  New  England  or  to  the 
Gulf,  lie  is  justified  in  making  low  rates  to  the  Carolinas 
which  pays  his  line  as  much  or  more  than  his  proportion 
of  the  through  rate.  We  have  already  descanted  on  the 
impropriety  of  a division  of  a through  rate  being  made 
the  measure  of  a rate  to  a local  industry. 

The  fallacy  of  this  lies  in  the  fact  that  he  can  get  the 
cotton  to  the  mills  at  the  old  or  higher  rates,  and  the 
product  from  the  mills  at  his  regular  rates,  and  in 
addition  to  these  get  an  equitable  share  of  the  cotton  for 
export  or  to  New  England  mills. 


Mr.  Finley  states  in  a letter  to  Mr.  Van  den  Berg : 

“You  overlook  entirely  the  fact  that  the  develop- 
ment, up  to  a comparatively  recent  period,  has  been 
based  almost  entirely  on  the  consumption  of  cotton 
grown  in  the  territory  immediately  contiguous  to  the 
mills.  You  completely  ignore  the  fact  that  the  enlarge- 
ment of  the  mills  heretofore  built,  and  the  addition  of 
many  new  mills,  under  the  operation  of  natural  forces, 
together  with  the  fact  that  a number  of  the  mills  are 
manufacturing  a finer  grade  of  goods  than  formerly, 
make  it  absolutely  necessary  that  those  mills  should  go 
to  other  States  for  a portion  of  their  supply  of  cotton.” 

We  can  not  very  well  ignore  facts  that  are  so  promi- 
nent as  these.  If  the  development  of  the  cotton  industry 


46 


in  the  Carol inas  increases  in  anything  like  the  same 
ratio  that  it  has  for  the  past  five  years,  it  will  only  be  a 
short  time  when  the  demand  for  cotton  for  the  Carolinas 
from  Alabama  and  Mississippi  will  be  fully  as  great  as 
that  of  Jflew  England.  It  is  because  we  are  so  conscious 
of  these  facts,  rather  than  that  we  ignore  them,  that 
makes  us  so  solicitous  for  the  maintenance  of  the  old 
rate  schedule.  When  these  Carolina  mills  begin  to  manu- 
facture to  any  great  extent  a liner  grade  of  goods,  and 
are  obliged  to  come  to  Mississippi  for  a better  staple  of 
cotton,  then  it  is  that  we  will  feel  the  full  force  of  the 
rates  which  the  Southern  Railway  proposes  to  establish. 
In  order  to  protect  our  interests  on  shipments  to  New 
England  or  to  the  Gulf,  for  export,  we  will  be  obliged  to 
put  our  rates  down  to  a plane  that  will  enable  the  mills 
in  which  we  are  interested  to  compete  successfully  with 
those  of  the  Carolinas.  In  view  of  the  great  strides 
made,  and  the  certain  further  growth  of  these  Carolina 
mills,  it  is  the  future  results  of  these  rates  that  we  are 
most  apprehensive  of.  Their  record,  as  we  find  it  to- 
day, with  the  improvements  and  enlargements  of  old 
mills,  as  well  as  the  construction  of  new  ones,  does  not 
evidence  any  need  of  reduced  rates  for  their  maintenance 
or  future  growth.  It  is  common  report  that  they  are 
highly  prosperous.  In  its  review  and  report  of  the 
cotton  crop  for  the  past  season,  the  Financial  Chronicle 
Supplement  of  September  last,  in  alluding  to  the  benefits 
which  accrue  from  the  operation  of  small  mills,  states: 

“.It  so  happened  that  Mr.  Witliam  of  Georgia,  had 
three  of  these  mills  in  operation  in  1899,  which  were 
extremely  profitable.  Of  these  three  mills  lie  is  reported 
to  have  said  one  made  a profit  last  year  of  40  per  cent, 
one  54  per  cent,  and  one  100  per  cent. 

A recent  issue  of  the  Manufacturers ’ Record  of 
Baltimore,  gave  a statement  of  the  values  of  stock  of 
many  of  the  mills  in  North  and  South  Carolina.  From 
this  I find  that  the  value  of  the  stock  of  sixteen  mills  in 
North  Carolina  ran  from  76  to  210,  the  average  being 


47 


130 ; of  thirty -five  mills  in  South  Carolina,  the  stock 
value  ran  from  90  to  275,  the  average  being  124. 

This  is  much  better  than  the  price  of  any  southern 
railroad  stock  that  has  come  to  our  notice. 


It  has  been  stated  by  the  Southern  Railway  officials 
that  the  requirements  of  the  Carolina  mills  from  outside 
States  would  not,  for  the  p resent,  exceed  250,000  bales 
of  cotton,  and  for  this  reason  the  north  and  south  lines 
in  Alabama  and  Mississippi  should  give  the  reduced 
rates  a trial.  It  is  not  necessary  to  give  them  a trial  in 
order  to  learn  what  their  effect  will  be  on  the  other 
roads.  Mr.  Graham,  Traffic  Manager  of  the  Louisville 
& Nashville  Railroad,  stated  at  the  St.  Louis  meeting, 
October  4tli,  that  the  experience  of  his  company  the 
previous  season,  before  the  rates  were  reduced,  was  that 
buyers  who  desired  to  ship  for  export  and  to  Eastern 
mills  were  not  able  to  compete  with  the  Carolina  mills 
at  either  Decatur  or  Birmingham.  He  relates  that 
his  line  brought  into  Decatur  locally,  6,756  bales  of 
cotton  more  than  it  took  out,  though  by  custom  and 
usage  it  was  understood  that  each  line  would  take  out 
as  much  as  it  brought  in.  On  the  Decatur  proper 
cotton  and  cotton  from  the  river,  which  by  custom  was 
generally  divided  half  and  half  to  the  Louisville  & 
Nashville  and  Southern  Railway,  the  latter  took  10,801 
bales  and  the  former  only  4,309.  At  Birmingham  it  was 
very  much  the  same,  the  cotton  was  bought  for  and 
shipped  to  the  Carolina  mills. 

We  find  that  there  were  shipped  from  our  local 
stations  via  our  junctions  with  the  Southern  Railway 
last  season  to  the  Carolinas,  or  other  mills,  5,865  bales 
at  the  old  rates.  This  was  in  addition  to  38,605  bales 
which  the  Southern  Railway  took  from  the  junctions 
proper. 

Does  it  not  stand  to  reason  that  the  Carolina  mills 
can  pay  these  old  rates  ? Only  a small  percentage  of 


48 


their  consumption  is  competitive  with  New  England  or 
foreign  markets,  then  a certain  percentage  of  the  prod- 
uct is  sold  in  the  South  and  West,  upon  which  they 
do  not  have  to  pay  as  high  rates  as  do  their  competitors 
of  New  England.  We  are  unable  to  give  the  percentage 
of  the  product  of  all  the  mills  which  is  marketed  in  the 
South  and  West,  but  an  idea  as  to  this  may  be  formed 
from  information  obtained  direct  from  some  of  the 
important  mills. 

The  percentages  of  the  product,  as  stated  below,  are 
reported  by  the  following  mills  to  have  been  shipped 
West: 

Grendel Greenwood,  S.  C 60  $ West. 

Columbia Columbia,  S.  C. 50  $ “ 

Clifton  Mfg.  Co., No.  ]&  2. Clifton  and  Converse,  S.  C..25  $ “ 

Glendale  Glendale,  S.  C _25  “ 

Granite  Mfg.  Co ) 

Cora  M fg.  Co. >■  Haw  River,  N.  C. 33j$  “ 

Tho.M.Holt  Mfg.Co.__  ) 

Aurora  Cotton  Mills Burlington,  N.  C 40  $ “ 

Elmira  Cotton  Mills Burlington,  N.  C 40  $ “ 

Attamaha  Cotton  Mills Elon  College,  N.  C. 80  $ “ 

Ossipee Elon  College,  N.  C 20  $ “ 

Durham  Cotton  Mfg.  Co. .East- Durham,  N.  C. 25  $ “ 

Erwin  Cotton  Mills West  Durham,  N.  C 25  $ “ 

Pearl  Cotton  Mills Durham,  N.C.  25  % “ 

Odell  Mfg.  Co Concord,  N.  C 25  0 “ 

Cannon  Mfg.  Co Concord,  N.  C. ... 25  $ “ 

Cabarrus  Cotton  Mills Concord,  N.  C 33i a 

Patterson  Mfg.  Co China  Grove,  N.  C 25  $ “ 

Wiscossitt  Cotton  Mill Albemarle,  N.  C 25  $ “ 

Efried  Mfg.  Co. Albemarle,  N.  C 20  $ “ 

Highland  Park  Mfg.  Co._  .Charlotte,  N.C 15  $ “ 

While  it  may  be,  as  stated  by  the  Southern  Railway, 
that  250,000  bales  from  other  States  will  meet  the  present 
requirements  of  the  Southern  mills,  how  about  the  future 
demand,  considering  the  marvelous  progress  which  the 
industry  is  making  ? With  the  many  natural  advantages 
which  the  Southern  mills  will  always  enjoy,  such  as 
getting  a large  share  of  their  cotton  at  home,  cheap  labor 
and  fuel,  and  the  marketing  of  a portion  of  their  product 


49 


in  the  South  and  West  at  cheaper  rates  than  Northern 
mills,  will  not  their  development  be  as  great  for  years  to 
come  as  it  has  been  in  the  past?  Will  it  not  come  to  a 
pass,  then,  where  the  North  and  South  lines  will  have  to 
protect  their  cotton  markets  against  the  competition  of 
the  Carolina  mills? 

The  New  York  Mail  and  Express,  in  a recent  issue, 
had  this  to  say  on  the  cotton  situation  of  the  South : 

Notwithstanding  the  falling  otf  in  the  export  of  the 
coarser  and  cheaper  cotton  fabrics  on  account  of  the 
interruption  of  trade  with  China,  there  is  evidence  of  a 
continued  increase  of  cotton  mills  in  the  South.  Reports 
for  the  month  of  September  show  that  six  new  factories  — 
five  in  Georgia  and  one  in  North  Carolina — were  on  the 
point  of  completion.  They  represent  an  investment  of 
$735,000  and  contain  a total  of  29,000  spindles  and  861 
looms.  Besides  these,  eleven  other  mills  are  projected 
and  under  way,  which  will  cost  over  $1,000,000  and  have 
a capacity  of  53,000  spindles. 

This  is  part  of  a growth  that  has  been  continuous  in 
recent  years.  During  the  cotton  year  1898-99,  ending 
with  September,  Northern  cotton  mills  used  2,247,092 
bales  of  material,  and  those  of  the  South  1,400,026  bales, 
while  in  the  year  just  closed  the  Northern  consumption 
was  2,192,671  bales  and  the  Southern  1,599,947.  The 
former  show  a decrease  of  54,421  bales  and  the  latter 
an  increase  of  199,921. 

The  advantages  of  the  South  for  cotton  manufactur- 
ing have  been  many  times  set  forth,  and  are,  in  fact, 
rather  obvious  — unused  water  power,  contiguity  to  the 
raw  material  and  consequent  low  cost  of  transportation, 
cheap  labor,  and  a home  market  formerly  supplied  from 
the  North.  These  conditions  insure  a continued  growth 
of  the  industry  in  the  production  of  the  lower  grade  of 
goods,  but  the  people  there  are  beginning  to  learn  how 
to  produce  some  of  the  liner  grades.  There  are  spinning 
mills  at  Chattanooga  which  are  using  Egyptian  cotton 
for  tine  yarns. 

The  present  advantage  of  the  New  England  mills  lies 
■chiefly  in  the  production  of  the  liner  goods  and  print 
•cloths  and  the  greater  facility  for  export  from  Eastern 
ports,  though  they  still  have  control  of  a larger  domestic 
market.  There  is  likely  to  be  a growing  rivalry  in  the 


50 


South  in  all  branches  of  the  cotton  industry,  for  it  has  a 
permanent  advantage  in  growing  the  raw  material,  while 
capital  and  skill  are  easily  transferred. 

In  the  Atlanta  Constitution  of  November  7th  we  find 
the  following  editorial,  which  is  germane  to  the  points  in 
issue : 


OUR  REAL  CONTEST. 

The  real  contest  in  which  the  whole  South  is  interested, 
and  from  which  no  outside  question  should  divert  her,  is 
the  cotton  stalk. 

It  is  no  longer  the  lint,  because  inventions  now  made 
and  under  completion  disclose  the  cotton  stalk  as  a whole 
the  creator  of  wealth.  Cotton  seed  has  created  a busi- 
ness which  rivals  the  manufacture  of  the  lint,  and  now 
that  hulls  enter  to  furnish  the  great  paper  output  of  the 
world,  it  will  be  seen  that  the  entire  plant  is  coming  into 
play  as  an  agency  of  profit  to  the  skillful  handler. 

In  a recent  statement  before  the  New  England  Cotton 
Manufacturers’  Association,  Mr.  Edmonds  presented 
these  gentlemen  with  some  figures  which  must  have  been 
a revelation  to  them,  as  they  certainly  are  to  the  people 
of  the  South  itself,  where  the  aggregate  result  has  never 
been  fully  comprehended.  We  have  previously  com- 
mented upon  Mr.  Tompkins’  analysis  of  the  situation, 
in  which  he  showed  that  this  tide  is  but  returning  to  its 
natural  channel,  from  which  it  was  diverted  to  New 
England  almost  a century  ago  by  unfortunate  political 
developments.  Now  that  it  has  returned,  it  finds  no 
handicap  either  in  public  condition  or  in  personal  align- 
ment. All  eyes  are  turned  toward  the  rising  sun,  and 
our  people  are  anxious  for  the  work  to  proceed  until  it 
shall  have  accomplished  the  full  measure  of  its  purpose. 
It  is  at  this  point  that  Mr.  Edmonds  has  been  at  some 
pains  to  collate  figures  which  must  be  an  inspiration  to 
those  who  stand  expectant  in  the  cotton  field,  and  who 
have  thrown  into  their  hands  such  wonderful  possibilities. 

The  period  of  twenty  years  from  1840  to  1860  was 
filled  with  a spirit  of  commercial  unrest  in  the  South, 
which  tasked  the  energy  of  politician  § to  overshadow. 
Between  1844  and  1850  the  local  consumption  of  cotton 
had  increased  from  66,000  to  100,000  bales,  or  20  per 
cent,  for  which  sale  was  found  through  New  York  and 
Philadelphia  merchants.  Though  little  attention  has 


51 


been  paid  to  this  phase  of  the  question,  there  can  be  no 
doubt  that  much  of  New  England’s  jealousy  of  the  South, 
then  growing  strong,  was  prompted  by  the  fear  which 
this  local  cotton  consumption  suggested.  In  fact,  the 
matter  was  made  subject  of  one  notable  debate. 

The  capital  invested  in  Southern  manufactures  in- 
creased from  $94,595,734  in  1850  to  $167,855,315  ten  years 
later,  the  number  of  employees  from  163,903  to  189,832, 
and  the  value  of  products  from  $165,581,935  to  $291,375,- 
413.  Hence  we  may  see  that  even  then  we  were  claiming 
our  share.  But  it  is  from  1880  that  we  must  date  the 
onward  boom  which  has  since  swept  so  resistlessly 
onward,  in  which  the  great  cotton  exposition  held  by 
Atlanta  in  Exposition  park  was  such  a factor.  At  that 
time  the  Southern  States  had  160  cotton  mills,  with 
583,696  spindles  and  12,194  looms,  using  188,744  bales  of 
cotton,  while  the  total  number  of  mills  in  the  country 
was  751,  with  10,678,516  spindles  and  227,156  looms, 
using  1,570,342  bales.  By  1887  the  number  of  mills  in 
the  South  had  increased  to  249,  with  1,213,346  spindles, 
while  in  the  whole  country  there  were  916  mills,  with 
13,520,119  spindles.  A fair  estimate  of  the  relative  prog- 
ress of  the  industry  in  the  North  and  in  the  South  since 
1887  may  be  had  in  the  following  table,  in  which  the 
figures  for  Southern  mills  represent  actual  consump- 
tion of  bales,  while  those  for  Northern  mills  represent 
“ takings  ” : 


Year  Southern  Northern 

Endine  Mills.  Mills. 

August  31.  Bales.  Bales. 

1887  401,452  1,710,080 

1888  456,090  1,804,993 

1889  479,781  1,785,979 

1890..  546,894  1,799,258 

1891  604,661  2,027,362 

1892  686,080  2,190,766 

1893  743,348  1,687,286 

1894  718,513  1,601,173 

1895.. . 862,838  2,083,838 

1896. 904,701  1,600,271 

1897  1,042,671  1,804,680 

1898  1,231,841  2,211,740 

1899  1,399,399  2,190,095 

1900  1,597,112  2,068,300 


Summarized  by  Mr.  Edmonds,  the  result  was  that  in 
fourteen  years  the  advance  in  consumption  of  Southern 


52 


mills  was  from  401,452  bales  to  1,597,112  bales,  or  297  per 
cent,  while  that  at  Northern  mills  was  from  1,710,080 
bales  to  2,068,800  bales,  or  20  per  cent.  A striking  fea- 
ture of  the  advance  at  the  South  is  the  fact  that  every 
year  has  shown  an  increase  except  in  1894,  when  there 
was  a decline  of  about  25,000  bales,  which  was  more  than 
compensated  for  in  the  advance  of  140,000  bales  the  next 
year.  While  it  required  from  1890  to  1897,  or  seven 
years,  for  Southern  consumption  to  increase  from  the 
lialf-million  to  the  million-bale  mark,  the  increase  from  the 
million-bale  mark  to  the  million  and  one-half  bales  took 
only  three  years.  On  the  other  hand,  the  consumption 
of  Northern  mills  has  fluctuated,  showing  declines  in  1889, 
1893,  1894,  1896,  1899,  the  takings  in  1900  being  but  40,- 
000  bales  more  than  those  of  1891,  ten  years  before. 

In  this  fourteen-year  period  the  South’s  consumption 
of  cotton  expanded  from  less  than  20  per  cent  to  more 
than  40  per  cent  of  the  total  used  in  the  country,  yet 
that  total,  amounting  during  the  past  season  to  3,665,412 
bales,  represented  only  about  38  per  cent  of  the  crop  of 
cotton  raised  in  this  country.  That  fact  leads  to  the 
main  point,  viz.,  the  outlook  for  American  cotton  manu- 
facturing from  the  Southern  standpoint. 

From  such  study  of  this  whole  subject  as  we  have 
been  led  to  make,  we  are  firmly  of  the  opinion  that  if 
protection  in  the  way  of  reduced  freight  rates  is  to  be 
accorded  to  any  of  these  cotton  mill  industries,  the  New 
England  and  the  foreign  mills  will  need  it  much  sooner 
than  will  the  Southern  mills ; indeed,  from  what  has 
been  here  shown,  it  is  a grave  question  as  to  whether 
they  do  not  now  need  it  as  against  the  competition  of 
the  Southern  mills. 


Is  it  not  possible  that  the  Southern  Railway,  by  its 
proposed  action,  may  defeat  the  very  object  it  had  in 
view?  That  object  was  to  give  its  Carolina  mills,  in  the 
way  of  low  rates,  still  further  advantages  over  the  New 
England  and  foreign  mills.  At  the  best,  the  Carolina 
mills  can  partake  of  these  low  rates  only  on  a limited 
percentage  of  the  cotton  consumed,  as  the  major  part  of 
their  requirements  will  be  supplied  at  home.  If  the 


53 


north  and  south  lines  in  Alabama  and  Mississippi 
should  make  to  their  markets  sweeping  reductions  cor- 
responding with  those  made  by  the  Southern  Railway — 
and  it  is  only  a matter  of  time  when  they  may  be 
obliged  to  do  so — such  reductions  being  on  a much 
larger  percentage  of  the  New  England  consumption 
than  on  the  Carolina  consumption,  would  it  not  neces- 
sarily benefit  the  New  England  mills  much  more  than  it 
would  those  of  the  Carolinas  ? A reduction  in  the  rates 
from  Mississippi  to  Boston  would  in  all  likelihood  result 
in  reductions  from  points  west  of  the  Mississippi  River, 
in  which  event  all  of  the  New  England  cotton  would  be 
hauled  at  reduced  rates,  whereas  only  a small  percentage 
of  that  to  the  Carolinas  would  be  thus  favored.  How 
would  the  Southern  Railway  equalize  an  apparent  ad- 
vantage to  New  England  of  this  kind? 

Since  the  low  rates  have  been  in  effect  we  have  had 
reports  from  our  agents  that  the  price  of  cotton  for  the 
Carolina  mills  has  been  quoted  at  stations  on  the  South- 
ern line  contiguous  to  ours  at  as  much  as  f cents  per 
pound  higher  figure  than  shippers  to  New  England 
or  to  the  Grulf  could  offer.  We  have  a record  of  a 
transaction  November  6th,  when  two  orders  were 
booked,  1,000  bales  strict  middling  for  North  Carolina 
and  300  bales  for  Boston,  both  at  9f  cents  f.  o.  b.  des- 
tination. This  would  show  that  North  Carolina  can  pay 
as  much  for  cotton  as  Boston.  The  freight  rate  in  this 
case  was  about  twenty-five  points  in  favor  of  North 
Carolina,  account  of  the  Southern  Railway  reduction. 
It  will  be  noticed  that  in  this  instance  the  Southern  Rail- 
way could  just  as  well  have  gotten  a rate  equivalent  to 
that  charged  to  Boston. 

We  do  not  see  what  the  Southern  Railway  hopes  to 
gain  by  this  large  reduction  in  the  cotton  rates  to  the 
Carolina  mills,  unless  the  other  lines  charge,  the  old 
schedule.  . As  we  understand  this  matter,  the  price  of 
cotton  on  our  line  in  Mississippi  is  governed  by  the  quo- 
tations at  New  Orleans.  The  price  of  the  cotton  at  our 


54 


stations  is  the  New  Orleans  price,  less  the  brokerage  and 
freight  rates  to  New  Orleans.  If,  therefore,  the  North 
and  South  lines  should  deem  it  necessary  to  reduce  their 
rates  a corresponding  figure  to  the  reduction  made  by 
the  Southern  Railway,  the  price  of  cotton  at  the  stations 
would  still  be  the  New  Orleans  price  less  the  freight 
rates.  This  would  enhance  the  value  of  the  cotton  at  the 
stations  to  the  extent  of  the  reduction,  and  not  reduce 
the  price  at  the  mills  or  other  marts  of  trade. 

In  his  statement  at  the  St.  Louis  meeting  Mr.  Culp 
said  that,  ‘ 4 If  there  is  a demand  for  cotton  in  the  Caro- 
linas,  the  lines  which  do  not  carry  Carolina  cotton  must 
recognize  that  they  will  have  to  give  up  some  of  their 
cotton,  and  that,  even  though  the  Southern  Railway 
charged  higher  rates,  and  the  Carolina  mills  saw  fit  to 
buy  it,  the  lines  who  do  not  carry  the  Carolina  cotton 
would  have  to  give  up  some  of  their  cotton  anyhow.” 
This  does  not  necessarily  follow.  No  matter  what 
the  rates  the  Southern  Railway  makes  from  Alabama 
or  Mississippi  to  the  Carolina  mills,  every  intelligent 
and  faithful  traffic  officer  of  other  lines  must  see  that 
not  one  single  bale  of  the  cotton  that  is  naturally 
tributary  to  the  stations  on  his  line  shall  be  diverted 
therefrom.  He  must  grade  his  rates  to  his  markets  so 
that  this  is  given  full  effect.  The  loss  of  cotton  at  the 
towns  on  the  line  of  any  road  means  the  loss  of  nearly 
all  kinds  of  other  business,  and  in  order  that  the  other 
business  shall  be  retained,  the  cotton  must  be  taken,  no 
matter  what  the  rates. 

The  Southern  Railway  has  established  a very  low 
basis  of  rates  from  Mississippi  points  700  miles  away,  to 
its  Carolina  mills.  It  justifies  it  upon  the  ground  that 
the  adjustment  is  equitable,  considering  the  rates  on  raw 
cotton  to  the  mills  plus  the  rates  on  the  product,  as  com- 
pared with  the  rates  on  raw  cotton  to  New  England  and 
European  countries  plus  the  rates  on  the  product.  The 
Southern  Railway,  regardless  of  the  interests  of  other 
lines,  forces  upon  them  this  low  basis  of  rates  and 
attempts  to  justify  it  by  the  reasons  given. 


55 


The  Illinois  Central  has  no  cotton  factories  requiring 
cotton  from  the  outside,  but  it  has  markets,  marts  of 
trade,  which  are  as  important  to  it  as  are  the  Carolina 
mills  to  the  Southern  Railway.  If  the  Southern  Rail- 
way arbitrarily  announces  that  it  will  make  certain  low 
rates  to  Carolina  mills  from  junctions  with  the  Illinois 
Central,  why  is  the  latter  not  justified  in  saying  uthe 
Illinois  Central  can  haul  cotton  as  cheaply  per  mile  as 
can  the  Southern,  and  will  establish  rates  from  its  junc- 
tions to  its  marts  of  trade  on  as  cheap  a basis  per  mile  as 
the  Southern  Railway.”  For  instance,  if  it  were  to  estab- 
lish from  West  Point  to  New  Orleans  the  same  rate  on  a 
mileage  basis  as  that  made  by  the  Southern  Railway 
from  West  Point  to  Charlotte,  the  rate  would  be  18  cents 
per  hundred  instead  of  47,  as  it  was  prior  to  the  recent 
reduction.  In  the  same  way,  a proportion  to  Cairo  of 
the  76-cent  rate  from  Winona  to  Boston  would  be  17 
cents,  instead  of  39.  If  the  Illinois  Central  were  to  estab- 
lish rates  on  the  foregoing  basis,  it  would  mean  that  the 
Mississippi  cotton  of  the  Southern  Railway  would  come 
to  the  junctions  on  the  Mississippi  State  tariff,  and  be 
transported  by  the  Illinois  Central  to  New  Orleans. 
What  difference  is  there  between  this  principle  and 
that  which  the  Southern  Railway  insists  shall  apply 
with  regard  to  the  rates  that  it  shall  charge  ? 

It  will  be  a long  time  before  the  railway  lines  south  of 
the  Ohio  and  Potomac  rivers  can  operate  on  as  low  a 
basis  of  rates  as  that  in  effect  on  the  lines  north  thereof. 
The  following  statement  from  the  Interstate  Commerce 
Commission’s  report,  for  the  year  ending  1899,  shows  the 
earnings  per  mile  and  tonnage  one  mile  per  mile  of  line 
of  railroads  North  and  South  : 


Tons  one  mile 

Earnings.  per  mile 

of  line. 

Group  2 $14,949  1,774,273 

Group  3 7,859  1,042,562 

Group  4... 4,707  539,966 

Group  5 4,883  416,152 


56 


Groups  2 and  3 comprise  the  lines  north  of  the  river 
traversed  by  New  England  cotton.  Group  4 includes 
the  two  Virginias  and  the  Carolinas.  Group  5 includes 
all  the  territory  south  of  the  Ohio,  east  of  the  Missis- 
sippi, and  west  of  the  Virginias  and  Carolinas. 

It  will  be  seen  from  these  statements  that  the  earn- 
ings per  mile  of  Group  2 are  over  three  times  in  excess 
of  those  of  the  Southern  lines,  and  the  earnings  of 
Group  3,  or  the  lines  west  of  New  York  and  Pennsyl- 
vania and  east  of  the  eastern  boundary  of  Illinois,  are 
nearly  twice  greater  per  mile.  The  tons  carried  one 
mile  to  the  mile  of  line  show  about  the  same  excess. 

When  a thousand  or  more  miles  of  the  haul  of  the 
cotton  shipments  to  New  England  territory  is  made  over 
the  roads  north  of  the  Ohio  River  at  much  lower  rates 
than  the  Southern  lines  would  be  justified  in  charging, 
it  would  scarcely  be  considered  a remunerative  office  for 
any  Southern  line,  with  limited  earnings,  to  attempt  to 
equalize  them.  It  can  not  be  done  without  destroying 
the  entire  cotton  rate  fabric,  which  is  of  so  much  impor- 
tance to  the  railroads  of  the  South.  Neither  can  it  be 
expected  that  the  low  rates  for  ocean  carriage  of  three 
or  four  thousand  miles  to  foreign  countries  can  be  equal- 
ized without  also  breaking  down  the  entire  cotton  rates 
of  the  South. 


Is  it  not  a futile  undertaking  to  attempt  by  equaliza- 
tion of  the  combined  rates  on  cotton  and  its  product  to 
put  the  cotton  mills  in  different  territories  on  a parity  in 
the  markets  of  the  world  without  taking  into  considera- 
tion other  factors  that  affect  them,  such  as  the  price  of 
labor,  fuel,  etc.  In  a book  published  in  1899  by  D.  A. 
Tompkins  of  Charlotte,  N.  C.,  a recognized  authority  on 
cotton  mills  and  their  operations,  entitled  “Cotton  Mill 
Commercial  Features,  for  the  use  of  Textile  Schools  and 
Investors,”  he  shows  that  in  the  Southern  States  the  per- 
centage of  labor  to  the  whole  cost  of  cotton  goods  is 


57 


19  per  cent  as  against  ^28  per  cent  in  New  England.  In 
this  one  item  alone  there  is  a saving  to  Southern  mills  of 
over  47  per  cent.  As  the  Carolina  and  Georgia  mills  con- 
stitute 78  per  cent  of  all  the  Southern  mills,  they  must 
be  large  participants  in  this  saving.  In  the  same  publi- 
cation we  find  that  the  production  of  cotton  yarn  per 
spindle  per  year  was  66  pounds  by  the  New  England 
mills  and  161  pounds  by  the  Southern  mills.  While  we 
understand  that  the  yarn  number  spun  has  something  to 
do  with  this,  we  also  understand  that  it  is  largely 
influenced  by  the  modern,  newer,  and  more  rapid  running 
spindles  of  the  Southern  mills.  A certain  percentage  of 
the  product  of  the  Carolina  mills  is  sold  in  the  South  and 
West  upon  which  rates  are  less  than  from  New  England. 
All  these  things,  of  course,  should  have  consideration  in 
an  attempt  to  equalize  the  price  of  the  product  in  the 
common  market,  but  no  cognizance  is  taken  of  them  by 
the  Southern  Railway.  We  have  a right  to  demand  and 
to  know  how  far  these  several  factors,  as  well  as  the 
others  mentioned,  enter  into  the  question  before  we  are 
prepared  to  admit  that  a reduction  of  the  rates  on  raw 
cotton  as  much  as  $1.10  per  bale  at  West  Point  or  $1.65 
per  bale  at  Grand  Junction  is  the  only  way  by  which 
equalization  can  be  effected. 


From  the  foregoing  analysis  of  the  various  devices 
and  reasons  given  by  the  Southern  Railway  for  this  ter- 
rific onslaught  on  the  revenues  of  the  other  lines,  it  will 
be  observed  that  not  in  one  single  instance  can  they  stand 
the  tests  usually  applied  iu  determining  what  are  fair, 
reasonable,  and  necessary  rates.  They  are  found  wanting 
in  the  claim  set  forth  that  the  production  of  cotton  in  the 
Carolinas  is  not  sufficient  for  the  mills’  consumption; 
they  are  found  wanting  in  the  claim  of  equalization  on 
combined  rates  as  against  New  England  or  foreign  rates; 
they  are  found  wanting  in  the  necessity  of  equalizing  the 
combined  rates  on  cotton  and  the  product;  they  are 


58 


found  wanting  in  tlie  claim  of  commercial  necessity  or 
competition  with  other  markets;  they  are  found  wanting 
in  the  claim  for  an  equitable  adjustment  irrespective  of 
rates  to  other  sections;  they  are  found  wanting  in  the 
claim  that  the  rates  previously  charged  could  not  be 
justified  before  Courts  or  Commissions;  they  are  found 
wanting  as  to  their  being  justifiable  on  account  of  dis- 
tance when  compared  with  rates  and  distance  to  other 
marts  of  trade;  they  are  found  wanting  in  every  essential 
claimed  by  the  Southern  Railway  except  the  one  that  the 
adjustment  shall  be  made  so  long  as  the  revenues  of  the 
Southern  Railway  are  not  sacrificed. 

We  have  a right  to  demand,  and  must  insist,  that  the 
Southern  Railway  must  charge  from  its  junctions  with 
our  lines  as  high  rates  as  related  to  distance  on  cotton  to 
its  Carolina  industries,  as  we  charge  to  our  marts  of 
trade,  or  to  where  the  cotton  leaves  our  line  at  the  Ohio 
River,  due  allowance,  however,  to  be  made  for  extra 
distance  of  the  Southern  Railway  by  the  application  of 
the  recognized  principle  that  the  ratio  of  the  rate  de- 
creases with  the  distance.  ~No  valid  reason  can  be  shown 
by  the  Southern  Railway  why  this  practice  should  not 
be  observed. 

The  Carolina  mills  are  not  one  jot  of  more  importance 
to  the  Southern  Railway,  so  far  as  the  cotton  transpor- 
tation and  the  revenue  to  be  derived  therefrom  affect  the 
situation,  than  are  our  cotton  markets  to  us.  We  must 
zealously  and  resolutely  guard  these  against  the  inroads 
of  the  Carolina  mills  or  any  other  injurious  agency  that 
may  encroach  upon  them.  It  is  only  in  this  way  that 
our  interests  can  be  properly  protected. 

If,  by  the  action  of  the  Southern  Railway,  we  are  to 
have  an  era  of  low  rates  in  the  South  on  this  important 
traffic,  it  is  to  be  regretted.  Low  rates  on  this  traffic 
mean  a very  large  loss  of  revenue.  A serious  loss  of 
revenue  to  the  Southern  railroads,  as  this  will  prove  to 
be,  will,  with  a hope  of  recouping  the  loss,  result  in  a 
sharper  and  more  active  competition  in  other  freights. 


59 


It  is  needless  to  mention  what  this  will  beget.  The 
comparatively  high  rate  standards  in  the  South  which 
have  so  long  been  upheld  will  be  shattered.  We  are  all 
aware  that  owing  to  sparsity  of  tonnage  on  the  Southern 
lines,  as  contrasted  with  two  and  three  times  the  volume 
per  mile  of  the  Northern  lines,  these  high  standards  are 
an  absolute  necessity  for  the  proper  maintenance  of  the 
railroad  properties.  Even  now  we  are  doing  none  too 
well.  For  the  year  1899,  one  of  unprecedented  prosper- 
ity to  all  railroads,  the  lines  south  of  the  Ohio  and 
Potomac  and  east  of  the  Mississippi  rivers  earned  only 
3.2  per  cent  on  one-third  of  their  capital  stock.  On  the 
other  two-thirds,  or  $445,621,000,  nothing  was  paid. 
Under  such  conditions  as  now  obtain  it  would  seem 
almost  criminal  for  any  line  to  take  such  independent 
or  individual  action  as  would  have  a tendency  to  jeop- 
ardize the  tranquillity  of  the  entire  rate  situation  of  the 
Southern  railroads. 

Respectfully  submitted, 

For  the  Illinois  Central  Railroad  Company, 

Yazoo  & Mississippi  Valley  Railroad  Company, 

M.  C.  Markham, 

Assistant  Traffic  Manager . 


Chicago,  November  15,  1900. 


Rand.  McNally  & Co.,  Chicago. 


Memorimdtim . 


Lest  it  might  have  been  thought  that  the 
Illinois  'Central1  s rates  on  cotton  were  too 
high  a 55  related  to  the  rates  of  other  roads 
or  to  the  rates  on  other  comodi  ties,  the  fact 
was  emphasized  in  the  oral  argument  that  cot- 
ton was  selling  at  all  our  stations  at  $9.50. 
per  hundred  pounds;  that  our  average  rate  on 
the  cotton  is  about  40  cents  pe^r  hundred  pounds 
and  that  this  was  only  about  4p>  of  the  value. 

It  was  also  shown  that  the  rates  on  grain, 
meats  and  other  commodities  ran  as  high  as 
twenty-five,  thirty  and  forty  per  cent  of  the 
val  ue . 

The  Interstate  Commerce  Commission’s 
Report  for  the  year  18£9  shows  that  while  the 
“Southern  Roads  had  17/ > of  the  entire  mileage 
of  the  United  states, Inhere  was  originated  on 
those  roads  only  12.4/?  of  the  tonnage  of  the 
United  "tates ;2ilso  that  while  the  mileage  is  „ 
17/7  of  the  whole,  the  earnings  ware  only  11.6/1 
and  the  dividends  paid  only  6.4/?  of  the  div- 
idends paid  by  all  the  railroads. 

It  was  also  stated  in  the  oral  argument 
that  Poor’s  Manual  for  1900  shows  over 
$753,000,000  of  stocks  and  bonds  of  the  South- 
ern Railroads  that  were  non-productive  in  the 
year  1893.  It  was  further  shown  that  while  the 
capital  stock  of  railroads  north  of  the  Ohio 
and  Potomac  Rivers  was  as  much  as  thirty, forty 
and  fifty-four  thousand  dollars  per  mile, the 
average  of  the  Southern  Roads  was  only  twenty- 
one  thousand  dollars.  The  average  for  the 
whole  United  States  was  thirty-one  thousand 
dollars.  The  dividends  paid  by  the  Southern 
Lines  was  1 .08/>  while  the  dividends  of  the 
other  lines  with  this  greatly  increased  capi- 
tal stock  were  as  high  as  three  to  five  per 
cent . 


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